Market Overview

Canaccord Reviews Autodesk's 'Squishy' Q3, Hopes To Buy The Dip

Canaccord Reviews Autodesk's 'Squishy' Q3, Hopes To Buy The Dip

Autodesk, Inc. (NASDAQ: ADSK) reported fiscal third quarter results after the close Tuesday, posting 5.3 percent revenue growth to $515.3 million and a narrower non-GAAP loss of 12 cents per share.

The results exceeded estimates.

Autodesk's fourth quarter and fiscal 2017 non-GAAP earnings per share guidance could at best meet, or miss expectations.

The Analyst

Canaccord Genuity analyst Richard Davis, who said a "squishy quarter" pulled investor focus to the nearer term, maintained a Buy rating and

decreased his price target for the shares from $140 to $135.

The Thesis

The negative stock reaction can be traced to the below-par subscription additions and annualized recurring revenue, or ARR, as well as the recent run in the stock, Davis said in a Wednesday morning note. (See Davis' track record here.) 

Although Davis said he hoped to pick up Autodesk shares in the $105-109 range, but said the quarter is "almost certainly just a normal 'hiccough' in an extremely complex business model transition," and the stock is likely to stop at the $116 level, he said. 

Longer-term, Autodesk could double to $200-$250 within five years, if the $11 free cash flow target for 2022 is even roughly close, Davis said. The analyst sees last night's discomfort and stock dip as offering a nice entry point.

"Our rating remains BUY at current prices, but we get especially bullish if we get lucky and the stock pulls back a bit more over the next few days." 

The Price Action

Autodesk shares are up a solid 55 percent in the year-to-date period.

The shares were bid down 11.50 percent to $115 in pre-market trading.

Related Links:

From Autodesk To Synopsys, Your Guide To This Week's Software Earnings

Survey Says Autodesk Is Likely To Benefit From Consumer Trends

Photo courtesy of Autodesk.

Latest Ratings for ADSK

Nov 2019MaintainsOverweight
Nov 2019MaintainsBuy
Nov 2019MaintainsOutperform

View More Analyst Ratings for ADSK
View the Latest Analyst Ratings

Posted-In: Canaccord Genuity Richard DavisAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


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