Autodesk Q2 Beats Estimates, Boosts Guidance; Baird Raises Target To $75

Autodesk, Inc. ADSK reported better than expected Q2 results, while raising its FY17 guidance.

Baird’s Steven M. Ashley maintained an Outperform rating on the company, while raising the price target from $65 to $75.

Positive Surprises

Ashley mentioned management also revealed several positive surprises, such as formally acknowledging that over time, Maintenance customers would be migrated to Subscription.

Management also said pricing of the AutoCAD family would be modified in September, there was potential to attract new paying customers, and the product portfolio would continue to be rationalized and streamlined.

Beat Results

For Q2, Autodesk reported revenue of $552 million and EPS of $0.05, significantly ahead of the consensus and mostly in line with the estimates.

The revenue upside was driven by “stronger than expected cross-grades in which existing individual SKU Maintenance customers upgraded to Suites and Maintenance,” Ashley stated.

OpEx declined 4 percent year-on-year and came in better than anticipated, while sales in Japan continued to be weak.

While net new subscribers were in line with the consensus, new Business subscribers were stronger than expected at 125,000.

Guidance Raised

For FY17, Autodesk maintained its revenue guidance at $2,000-$2,050 million, while raising the EPS guidance from ($0.95)-($0.70) to ($0.70)-($0.55).

Some of the other highlights included: “1) Brexit has not impact on European demand; 2) management opportunistically stepped-up stock buyback activity after stock sold-off buying 3M shares for $170M; 3) Maintenance renewal rates were up yr-yr and near all-time highs;” among others.

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