On Wednesday, Mizuho Securities adjusted its view on Bentley Systems Incorporated (NASDAQ:BSY) shares, a provider of infrastructure engineering software solutions, by increasing the price target to $60 from $57 while reiterating a Buy rating on the stock.
The adjustment follows Bentley's first-quarter financial results for fiscal year 2024, which presented a mixed performance with subscription revenue and earnings per share exceeding expectations, although overall revenues were slightly below consensus due to a dip in services revenue.
Despite the mixed results, Bentley's management maintained its full-year 2024 guidance, indicating that business trends continue as usual. This outlook comes ahead of a leadership change, with a new CEO set to take charge on July 1, an event the company references as ensuring "Continuity." Mizuho's analyst noted the company's positive management tone, which contrasts with the challenging macro commentary from its peers.
Bentley Systems is anticipated to benefit significantly from the Infrastructure Investment and Jobs Act (IIJA) spending, according to the firm.
Additionally, the analyst believes that the company's cloud business is expected to expand substantially. The presence of public merger and acquisition interest from Schneider Electric (EPA:SCHN) is also seen as providing a valuation support for Bentley's shares.
The new price target of $60 implies a forward price to next twelve months free cash flow (NTM/FCF) multiple of 59 times, which is higher than the average of Bentley's industry peers.
This premium is justified by what Mizuho views as Bentley's balanced growth and profitability story. The firm's confidence in Bentley is reflected in the maintained Buy rating, suggesting that they see the stock as a good investment despite the current market conditions.
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