Nemetschek Is Too Expensive Again

2025-05-05 12:03:47 ET

Summary

• Nemetschek SE's stock has risen 32% since my last "Hold" rating, but remains expensive and likely unjustified at current prices.
• Q1/25 results show promising revenue growth of 26.3% YoY, with significant free cash flow increase driven by the GoCanvas acquisition.
• Despite optimistic growth projections, Nemetschek's dependence on the struggling housing market and potential recession pose risks to sustaining high growth rates.
• Long-term investors should "Hold" Nemetschek for potential double-digit growth, but short-term investors may face significant downside risk.

It has been more than a year since I published my last article about Nemetschek SE ( OTCPK:NEMKY ), the architecture software company from Munich, Germany. Back then, the stock was trading around $87 and now the stock is trading around $115. Back then, I wrote in my conclusion:

I am still rating Nemetschek as a "Hold" as we are talking about a high-quality business. But in my opinion, shareholders should really analyze for themselves if the current stock price is an opportunity to trim their position. As always, I would advise against shorting high-quality businesses like Nemetschek, but I certainly am not a buyer at this point.

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