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Jeffries downgrades Ansys, predicts slow growth

Mon, 10/25/2010 - 6:05pm
The Associated Press

A Jeffries analyst downgraded shares of Ansys Inc., maker of engineering simulation software, to "Hold" from "Buy" on Monday, predicting that non-aggressive hiring as well as a transition in the kinds of products Ansys sells will lead to slow, modest growth.

The firm's downgrade suggests that it still has confidence in Ansys' potential for growth, but doesn't expect this growth in revenue to exceed expectations. Analyst Ross MacMillan believes that the company will see less than 15 percent revenue growth over the next 12 months, and that its operating margins will not exceed 50 percent.

MacMillan said the company's business is only slowly improving and its shares are trading at an appropriate price.

He added that Ansys and companies like it are taking measures to cut costs, but have not resumed hiring aggressively. He added that Ansys, in particular, is going through a transition in that it is starting to sell more comprehensive software suites, a move that could be slowing its momentum in the short term.

"Long term this should be positive, but the transition could be impacting current growth," he said.

Ansys shares gained 10 cents to hit $45.43 in afternoon trading.

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