Deutsche Bank: Geopolitical Blind Spot — FY26 Outlooks Not De-Risked for Middle East Headwinds
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Deutsche Bank asserts that escalating Middle East conflicts since the Iran tension have introduced new uncertainties for engineering software companies. Although the covered companies maintain low direct exposure to the region, management guidance has not been de-risked for potential near-term headwinds. This is particularly concerning given March's critical role as a key month for first-quarter deal closures, which elevates the risk of negative surprises. The bank maintains a selective preference, favoring Nemetschek, Autodesk, PTC, and MuM, all rated Buy, while adopting a cautious stance on Dassault and Hexagon, both rated Hold. Autodesk and Nemetschek demonstrate robust positioning in the architecture, engineering, and construction sector, benefiting from high recurring revenue proportions. Conversely, Dassault and Hexagon face elevated risks due to their larger exposure to cyclical industries, such as automotive and manufacturing, alongside lower recurring revenue ratios. For FY26, Autodesk guides 9-10% organic growth, and Nemetschek projects 14-15% organic constant-currency growth. PTC expects 8.5% annual recurring revenue growth alongside its 95% recurring revenue model. Target prices were adjusted, with Nemetschek lowered to EUR 46.00, PTC to USD 180.00, Dassault to EUR 20.00, and Hexagon to SEK 100.00.