Autodesk Posts Solid Quarter, But Analysts Still Divided Over Prospects

Autodesk, Inc. ADSK reported strong fiscal third-quarter results, outperforming expectations on important metrics.

KeyBanc Bullish

Jason Celino of KeyBanc Capital Markets mentioned that the company primary fiscal 2021 outlook was “encouraging.”

Autodesk indicated that free cash flow and revenue could grow in the low-20% range, in-line with current consensus expectations.

“This affirms our confidence in FY21 growth prospects, macro, and alleviates some reservations around potential headwinds to future demand from the over-strength of three-year deals this year,” Celino wrote in the note.

He maintained an Overweight rating while raising the price target from $184 to $191.

Wedbush On The Sidelines

Wedbush's Steve Koenig said that although the macro environment remained the same as in the prior quarter, Autodesk’s execution improved in the third quarter in the UK and Europe.

While the third quarter was benefited by early closes of some fourth-quarter deals, this is the reason for the company’s below-consensus revenue guide for the fourth quarter, Koenig mentioned.

“The overall 4Q outlook is the sum of many moving parts, and our read is that these moving parts don’t support confidence in meeting prior FY20 objectives, perhaps due to lagging EMEA (Europe, the Middle East and Africa) results,” the analyst wrote.

He reiterated a Neutral rating while raising the price target from $162 to $171 on higher free cash flow estimates.

BofA Bearish

Kash Rangan of Bank of America noted that Autodesk’s third-quarter beats were driven by pull forwards of multiyear prepayment deals, discounts and price hikes in maintenance products. He explained that these factors would make comps tougher going forward, resulting in the company’s growth slowing.

Autodesk’s organic ARR (accounting rate of return) continues to decelerate, comps would get tougher through fiscal 2023 and macro uncertainty remains, Rangan said.

The analyst maintained an Underperform rating and a price target of $127 for the company.

Price Action

Shares of Autodesk wer up 4.01% at $177.64 at the time of publishing on Wednesday.