Our 1-year target price is $343/share, which implies ~30.7x FY2026E EV/FCF at ~970M FY26E FCF discounted at 10% cost of equity. Our valuation framework is based on regression analysis of trading multiples and growth + profitability of companies across the software universe.

Downside risks that could push the stock below our target price:
1. Growth investments and large M&A could weigh on margins
2. Investments in sales capacity and execution may not drive sustainable double digit organic growth
3. US foreign policy on approvals of simulation software technologies to China becomes tighter.
Upside risks that could push the stock above our target price:
1. Long term growth driver in new adjacencies (AI/ML, Digital Twin, IoT) experience faster uptake in a wider industry.
2. Use cases increase more rapidly from non-engineer users adopting simulation. 
3. US foreign policy on approvals of simulation software technologies to China becomes softer.