Aspen Technology (NASDAQ:AZPN) shares are down around 1% Wednesday after the stock was downgraded to Sector Weight from Overweight at KeyBanc Capital Markets.
Analysts told investors that the company "is stuck between a rock and a hard place," with F4Q a vital quarter for the company.
"We fully acknowledge F4Q will be a make-or-break quarter and believe the bar of 10% ACV growth guidance for FY24 is a difficult one to clear, and would likely be contingent on the performance of acquired Emerson (NYSE:EMR) assets, OSI and SSE," wrote the analysts.
They stated that chemicals weakness poses a near-term growth challenge to the company's Heritage business, which it has previously said is due to macro, resulting in a pullback in customer spend and lengthened sales cycles.
"While we believe AspenTech's LT secular tailwinds and sustainability opportunities remain intact, we are lowering our estimates and downgrading to Sector Weight to reflect the heightened NT execution risk," they added.
Even so, they noted that his firm will look to revisit the AZPN story following a more confident path back to LDD to mid-teens type growth.