(News Bulletin 247) – The German bank went from “hold” to “buy” on the French professional software publisher, judging that its valuation is too undemanding at a time when its sales seem to be gaining strength.

Certainly Dassault Systèmes had a good year in 2023 on the stock market. The specialist in computer-aided design and manufacturing software (CAD/CAM) recorded an increase of 32.06%, which ranked it eleventh in the CAC 40.

However, his performance could have been even better. The year 2023 saw the technology compartment be supported by the end of expectations of rate increases from major central banks, a movement favorable to growth stocks. A German comparable of Dassault Systèmes, Nemetschek, saw its share price increase by almost 65% in 2023.

In any case, it appears that the company created by former Dassault Aviation engineers is not very expensive on the stock market.

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A not so demanding valuation

In any case, this is the point developed by Deutsche Bank this Tuesday. The German establishment, in a note, raised its purchase advice on Dassault Systèmes, against “hold” previously, and increased its target to 55 euros against 40 euros previously.

Which supports Dassault Systèmes action. The software publisher gained 1.7% around 10:40 a.m. on the Paris Stock Exchange and signed the best performance of the CAC 40 in a sluggish market, the Parisian index falling by 0.4% at the same time.

The German establishment notes that the company’s valuation multiples have depreciated significantly since their peak in 2021, even after the stock market rally that Dassault Systèmes experienced from the third quarter of 2023.

Based on the profits expected in 2024 and 2025, the valuation of Dassault Systèmes is thus lower by 12% and 20% respectively than its historical average over five years, while in comparison the American PTC (Parametric Technology Corporation), the one of the most important Dassault Systèmes comparables, is evolving on its historical records.

3DExperience is gaining ground in the automobile industry

This difference in valuation is not really justified as Deutsche Bank anticipates a robust outlook for the company.

“Our sectoral analyzes show a growing adoption of 3DExperience technology (a platform marketed by Dassault and which unifies all of its offers and functionalities in the management of the product life cycle, Editor’s note) in the automotive sector, “a turnaround of Solidworks (a 3D CAD software) and a re-acceleration of growth in the life sciences sector by 2025”, explains the German bank.

“With macroeconomic headwinds on new licenses also easing, with PMIs bottoming out, we believe now is the right time to take a more positive stance on a high-quality market leader in the field of engineering software”, concludes Deutsche Bank.

Dassault Systèmes will be among the first CAC 40 companies to deliver its annual results (only STMicroelectronics and LVMH will be ahead of it, on January 25), the publication date being scheduled for February 1.