On Wednesday, BMO Capital Markets maintained its Market Perform rating on shares of Autodesk (NASDAQ:ADSK) but increased the price target to $308.00, up from the previous $287.00. The adjustment follows the analysis of Autodesk's ongoing business model transition, which is expected to significantly influence the company's billings, revenue, and margins in the coming fiscal year.
The analyst from BMO Capital Markets observed that Autodesk's growth, despite being lower than anticipated, shows persistence in the low-teens when certain distortions are excluded. This indicates that the company's underlying performance remains strong. Autodesk's continued focus on key projects such as Fusion was also highlighted as a positive aspect of its progress.
Additionally, the recent hiring of a new Chief Financial Officer (CFO) at Autodesk was noted as a positive development. The new CFO's role is anticipated to be crucial in defining the company's margin narrative over the medium term. This executive change is seen as a strategic move for Autodesk as it moves forward with its financial planning and management.
BMO Capital Markets has made minor adjustments to its model for Autodesk and has rolled forward its valuation, which contributed to the new price target of $308.00. The analyst's remarks underscore the expectation that Autodesk will continue to evolve its business model, which will likely impact its financial outcomes in the near future.
The updated price target reflects the firm's analysis of Autodesk's current trajectory and the anticipated impacts of its business model changes on its financial performance. Autodesk's stock will continue to be observed by investors as the company navigates through these transitions and implements its strategic initiatives.
In other recent news, Autodesk showcased a strong third-quarter performance, with the software company's revenues meeting expectations and marking an 11% year-over-year increase. Autodesk's Non-GAAP earnings per share (EPS) of $2.17 exceeded both Rosenblatt's estimate and the consensus of $2.12.
As part of recent developments, Autodesk is in the midst of a strategic transition to a new transactional model, which is projected to contribute about $270 million to billings. This change is expected to add 5.0-5.5 percentage points to the overall figures.
Piper Sandler, Rosenblatt Securities, Mizuho (NYSE:MFG) Securities, and Oppenheimer have all updated their outlook on Autodesk. Piper Sandler raised its price target to $311, Rosenblatt Securities upgraded its price target to $325, Mizuho Securities lifted its price target to $280, and Oppenheimer reaffirmed a $350 target. All firms maintained their previous ratings for Autodesk.
Janesh Moorjani, formerly of Elastic (NYSE:ESTC), has been appointed as the new Chief Financial Officer (CFO) of Autodesk. The company is currently withholding any revenue growth forecasts for the next fiscal year until Moorjani has fully transitioned into his new role.
Autodesk aims to maintain a 10-15% growth framework over the long term and is preparing for strong free cash flow growth in fiscal 2026. These are among the recent developments for Autodesk.
InvestingPro Insights
Autodesk's financial metrics and market performance align with BMO Capital Markets' analysis and price target adjustment. According to InvestingPro data, Autodesk's revenue growth stands at 11.38% for the last twelve months, supporting the analyst's observation of persistent low-teens growth. The company's impressive gross profit margin of 91.92% underscores its strong underlying performance.
InvestingPro Tips highlight Autodesk's high return over the last year, with a 57.2% price total return over the past 12 months. This performance, coupled with the stock trading near its 52-week high (97.35% of the high), reflects investor confidence in the company's strategic direction and growth potential.
The new CFO's role in shaping Autodesk's margin narrative is particularly relevant given the company's current operating income margin of 23.36%. As the business model transition progresses, this metric will be crucial to watch.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for Autodesk, providing deeper insights into the company's financial health and market position.
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