Why Aspen Technology Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Aspen Technology (NAS: AZPN) have jumped today by as much as 20% after the company reported earnings that topped expectations.

So what: Revenue in the third quarter came out to $61.3 million, and the company squeezed out adjusted earnings per share of $0.01, topping the $0.05-per-share loss that everyone was expecting. CEO Mark Fusco said customers continue to snap up subscription-based offerings and that Aspen is seeing strong demand across all products.

Now what: Aspen saw record quarterly free cash flow of $54 million, and it has generated $81 million in free cash flow in the first nine months of its fiscal year, which is already higher than its previous full-year guidance. Canaccord Genuity is reiterating its "buy" rating and boosting its price target to $25, saying Aspen could get relabeled as a software-as-a-service and cloud company, boosting investor confidence.

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At the time thisarticle was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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