Jefferies penalized Dassault Systèmes – July 6, 2022 at 10:33

(AOF) – Dassault Systèmes is relegated to last place in the CAC 40 index and fell 2.07% to 38.75 euros due to a reduction in Jefferies’ recommendation. The broker switched from Hold to Underperform, while the target price was reduced to 33 euros from 40 euros earlier. The consulting company thinks the technology group is lagging behind industry trends in cloud / Saas software and considers it unlikely that it will organically meet its 2025 target in this area.

For analysts, Dassault Systèmes will solve this problem through acquisitions that will affect cash flow. “The acquisition of cloud capabilities has led to lower valuations elsewhere in the industry and Dassault is likely to suffer the same fate,” warns Jefferies.

AOF – GET MORE

Key points

– Software publishing company founded in 1981;

– Turnover of EUR 4.5 billion, generated 37% in Europe, 38% in the Americas and 25% in Asia;

– Activity divided between industrial innovation for 51%, mainstream innovation for 21%, life sciences for 18% and services for 10%;

– Business model based on the 3DEXPERIENCE virtual platform of several software useful for customers in search of sustainable innovations harmonizing product, nature and life with 3 key sectors – manufacturing industry, life sciences and health and infrastructure and cities;

– Capital controlled by 40.39% (54.45% of voting rights) by the Dassault family, 6% (8.06%) by Charles Edelsten, Chairman of the 12-member Board of Directors, and 1.62% (2.07%) by Bernard Charlès, Chief Executive Officer;

– Balance sheet, debt fell to EUR 2.7 billion and cash EUR 2.14 billion.

Challenges

– Human Industry Experience strategy aimed at strengthening leadership in manufacturing, infrastructures and cities, then life and health sciences: – capitalization of the group’s 13 main brands – Enovia, 3DExcite, Centric PLM for collaboration applications, SolidWorks, Catia, Geovia, Biovia for 3D modeling, 3DVia, Delmia, Simulia for simulations and Netvibes, Exalead, Medidata for information intelligence and a new 3D experience works for SMEs

– Offer focused on 11 economic sectors and 12 geographical areas;

– a financial target of 13% annual earnings per share growth for the years 2020 to 2024, ie EUR 6;

– R&D-supported innovation strategy of € 935 million with 12 technology portfolios;

– “Sustainability Compass” environmental strategy based on 3DEXPERIENCE Platform for Sustainability with 4 main commitments: 38% reduction in CO2 emissions per employee in 2025 (compared to 2018) – carbon neutrality for 2050 – 2/3 new licenses with a positive impact on the environment – federation of stakeholders;

– Activity visibility, repetitive software turnover generating 8/10 of revenue.

Challenges

– Growth of the cloud-based subsidiary 3DS Outscale, SecNumCloud, certified for the public sector in France and strengthened by the acquisition of NuoDB;

– Spin-off from the “virtual twins” synchronization program between the actual products and the data processed in the virtual products.

Software publishers: multiple acquisitions in healthcare

According to market research firm IDC, the healthcare industry is expected to spend more than $ 15 billion on software and cloud servers by 2023. Following Microsoft’s acquisition of Nuance, which combines voice recognition and telemedicine, for $ 16 billion, it is Oracle’s turn to make the largest acquisition in its history by acquiring Cerner, the number two medical software distribution company in the United States. The amount of this cash operation is $ 28.3 billion. Cerner, which had revenue of $ 5.5 billion in 2021, could enable Oracle to strengthen its cloud position as the U.S. group seeks to grow like its major rivals such as Google, Microsoft or Amazon.

Leave a Comment