Autodesk (ADSK) is expected to report F2Q21 earnings today after market close.
Going into the print, five-star RBC Capital analyst Matthew Hedberg expects Autodesk to deliver solid results in what remains a challenging environment.
He has just reiterated his buy rating on the design and software stock, while boosting his price target from $236 to $255 on peer-group expansion.
However, with shares up 37% year-to-date due to improving sentiment, this new price target indicates just 1% upside potential from current levels.
“We expect Autodesk to deliver solid results on 8/25 as checks indicate the selling environment remains balanced, but recent PMI/ABI data would suggest we are seeing some stabilization also illustrated by better-than-expected results from design-based peers” the analyst commented.
For Q2/21, he is looking for strength in subscription revenue, driven by 360 adoption (specifically BIM 360) balanced by some headwinds including fewer multi-year contracts and the potential for lower renewal rates, which is reflected in Q2 guidance.
“In early June, management hosted a virtual analyst day where we liked the framework of double-digit growth in revenue/FCF/operating profit beyond FY/23 due to TAM expansion from the cloud, monetizing non-compliant users, an acceleration in digitization of AEC and the convergence of Design and Make” Hedberg explained.
When looking at peers (ALTR/ANSS/DASTY/ PTC), on average they reduced FY revenue estimates by 5.4% following March results noted Hedberg. However, as demand trends stabilized, the group beat June revenue expectations by 6.2% and subsequently increased FY estimates by 1.7%.
Specifically, in terms of numbers, the RBC analyst is anticipating revenue vs. consensus of $899M (+12.8% y/y); subscription revenue vs. consensus of $826M (+24.4% y/y); billings vs. consensus of $776M (-13.1%); and FCF vs. consensus of ($13M).
He is also keeping an eye out for any updates on the competitive environment, as well as updates on the uptake of newer product including cloud-based solutions and the timing of converting non-compliant users.(See ADSK stock analysis on TipRanks).
Overall, the Street takes a cautiously optimistic Moderate Buy consensus on Autodesk stock, with 12 recent buy ratings offset by 2 hold ratings and 2 sell ratings. Meanwhile the average analyst price target of $243 indicates just over 3% downside potential lies ahead.
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