Autodesk Analysts Talk Growth Drivers After Investor Day

Applications software vendor Autodesk, Inc. ADSK held its Investor Day event Thursday, and analysts came away from the event with largely unchanged outlooks. 

The Analysts

Oppenheimer analyst Koji Ikeda reiterated an Outperform rating and $190 price target for Autodesk. 

Guggenheim Securities analyst Ken Wong maintained a Neutral rating.

Oppenheimer: Autodesk Has Multiple Levers To Drive Growth

Autodesk's presentation was upbeat, with updates on construction and manufacturing opportunities; the product portfolio; go-to-market strategies and growth drivers; free cash flow generation; and integration of recent acquisitions, Ikeda said in a Friday note. 

Autodesk reiterated its fiscal-year first-quarter and fiscal 2020 guidance, the analyst said. Taking cues from the presentations and citing intraquarter checks, the analyst said he expects the company to report above-consensus first-quarter results and in-line full year results.

"We see Autodesk well-positioned with its portfolio of applications, technology vision and referenceability to gain share in a large ($59-billion) Design and Make TAM." 

Now that the subscription transition is complete, Ikeda said he sees multiple levers that can drive the next leg of growth.

Guggenheim: Macro Headwinds Unlikely To Hurt Much

Autodesk gave the fiscal 2023 targets some credibility by outlining a financial framework of the sources of the company's growth, Wong said in a Friday note.

The growth drivers are three-pronged, the analyst said: 

• Market factors that should see little investor pushback.
• Execution-specific items such as a growing renewal base and increasing collections mix.
• An expansion in manufacturing and construction, which is characterized by market uncertainty and the least amount of disclosures.

The company highlighted construction as its key focus, with its product portfolio uniquely suited to capitalize on the total addressable market of $27 billion in 2023, Wong noted.

Delving into investor concerns around potential FCF headwinds from multiyear deals and macro, CFO Scott Herren said FCF should trend higher in each of the out years beyond 2020, with FCF growth moderately outpacing revenue growth.

In Autodesk's view, the macro environment is unlikely to have much of a negative impact given a higher mix of recurring revenue and the potential for subscription resilience, according to Guggenheim. 

The Price Action

Since the start of the year, Autodesk shares have gained about 19 percent. The stock was up 0.75 percent at $154.18 at the time of publication Friday. 

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Photo by Thorsten Hartmann/Wikimedia.