Canaccord Remains Sidelined on Autodesk, Inc. (ADSK) Despite Solid Q2:17; Here’s Why

Canaccord reiterates a Hold rating on ADSK, but raises the price target from $60 to $65

Autodesk, Inc. (NASDAQ:ADSK) posted a good second-quarter for the fiscal year of 2017, showing billowing product subscription sales and a performance outclassing both guided as well as unguided projections.

However, Canaccord top analyst Richard Davis remains neutral though he acknowledges nothing is notably “wrong” with ADSK’s results. Davis points out that, “The reality is that this company has so many moving parts, many of which remain opaque […]” although he notes positives weighing in the software giant’s favor. For instance, the analyst highlights Autodesk is currently well-positioned as “the leader while traditional competitors have been slow to embrace the shift to cloud and mobile technologies.”

The real bears lie around revenue “opacity.” As such, Davis reiterates a Hold rating on shares of ADSK, while raising the price target from $60 to $65, which represents just under a 6% downside from where the stock is currently trading.

Davis concludes, “To upgrade a stock we need good fundamentals, a reasonable valuation and a model that has at least some granularity upon which investors can agree or disagree with our work. Autodesk looks like it clears the first two hurdles, so we need to finish the latter. We would assign our massive team of Excel jockeys to accomplish this task – if we had one. We don’t, so our answer will be sometime in as near of a future as we can muster. For now, therefore, we remain at HOLD.”

Autodesk closed the quarter with total revenue of $550.7 million, beating Davis’ high-end of guidance of $520.0 million. Davis highlights Autodesk’s “cost discipline,” as ADSK’s EPS hit $0.05, topping Davis’ expectation by $0.18. Net subscriber additions shone during the quarter, reaching 109 K, climbing beyond the analyst’s estimate of 75 K. Management raised full-year guidance revenue by $25 million at the midpoint to $2,025 million, and improved non-GAAP EPS by $0.20 at the midpoint to ($0.625).

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Richard Davis has achieved a high ranking of #64 out of 4,127 analysts. Davis upholds a 62% success rate and yields 10.4% in his annual returns. When recommending ADSK, Davis earns 9.0% in average profits on the stock.

TipRanks analytics exhibit ADSK as a Buy. Based on 12 analysts polled in the last 3 months, 4 rate a Buy on ADSK, while 7 maintain a Hold. The 12-month average price target stands at $68.58, marking a slight 0.42% downside from where the shares last closed.

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