Jefferies maintains Buy on Dassault Systemes, EUR33 target

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On Wednesday, Jefferies reaffirmed its Buy rating for Dassault Systemes SE (DSY:FP) (OTC: DASTY (OTC:)), with a steady price target of EUR33.00. The firm’s analysis focused on the company’s market position and recent sales performance. A key takeaway from a discussion with a top-tier reseller of Dassault’s Catia and Enovia software platforms was that Dassault has maintained its market share without significant changes. Despite this stability, the reseller highlighted the potential for short-term trading volatility and noted Dassault’s ongoing challenges with transitioning to a subscription-based model.

The reseller reported that the fiscal year 2023 concluded strongly, which might have depleted the sales pipeline, leading to a slower start in January. However, customer engagement picked up in February, fostering optimism for meeting the first quarter’s budget expectations. The reseller has set a target for approximately 10% growth for the year, although larger resellers are anticipated to capture more market share, potentially making it difficult for the average group growth to reach the 10% mark.

Despite the slow beginning of the year, the reseller is actively trying to catch up. They expressed similar concerns last year, which were followed by Dassault falling short of first-quarter expectations. Nevertheless, given the low guidance for the first quarter and considering the previous year’s performance, the likelihood of a significant shortfall is deemed to be limited.

Dassault Systemes, a French software company known for its 3D design, 3D digital mock-up, and product lifecycle management (PLM) software, has been navigating the shift towards a subscription-based revenue model, a transition that has been challenging for many legacy software providers. The company’s performance in the upcoming quarters will be closely watched, as it aims to align with its growth targets and adapt to the evolving market demands.

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