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On Wednesday, KeyBanc Capital Markets made adjustments to its outlook on Autodesk (NASDAQ:ADSK) stock, with analyst Jason Celino revising the price target downward to $323 from the previous $335. Despite this change, the firm maintained its Overweight rating on the company’s shares. This adjustment comes as InvestingPro data shows 18 analysts have recently revised their earnings expectations upward for the upcoming period, with analyst targets ranging from $265 to $430.
Celino’s assessment followed his observations that Autodesk’s performance was tracking in line with or slightly below plans midway through the quarter. Resellers, who were found to be modestly behind their plans, attributed the softness to a pull-forward activity that occurred in the fourth quarter. Despite these challenges, InvestingPro data reveals the company maintains impressive gross profit margins of 92% and achieved revenue growth of 11.5% over the last twelve months. Additionally, there was noted incremental weakness and downsizing activity within the manufacturing sector.
Autodesk’s revenue guidance of 8-9% has been viewed by KeyBanc as incorporating some cushion, particularly in light of the company’s recent reduction in force (RIF). This assumption contributes to KeyBanc’s perspective on the moderate revision risk associated with the company’s financial projections.
Despite the lowered price target, KeyBanc’s positive outlook on Autodesk’s growth opportunities remains unchanged. The firm highlights the potential within the construction and infrastructure sectors for Autodesk. According to InvestingPro analysis, which offers comprehensive valuation metrics and 12 additional ProTips for subscribers, the stock currently trades at a P/E ratio of 51.1x and shows strong financial health scores. Furthermore, with Autodesk shares trading at a more than threefold discount compared to its peers, KeyBanc continues to support its thesis that there is room for potential multiple expansion. This expansion is anticipated to surpass the industrial software average of over 30 times in the long term.
The revised price target of $323 is based on a 30 times multiple of Autodesk’s fiscal year 2027 enterprise value to free cash flow (EV/FCF), adjusted to reflect the recent pull-back in valuation multiples. KeyBanc’s stance on Autodesk reflects a balance between current market trends and the company’s strategic positioning for future growth.
In other recent news, Autodesk reported significant financial growth, with FY 2025 revenue reaching $6.1 billion, marking a 12% increase from the previous year. The company’s non-GAAP operating margins have improved substantially, with further expansion expected in FY 2026. Autodesk also noted a 22% growth in free cash flow, reaching $1.6 billion in FY 2025, and has set a target of up to $2.175 billion for FY 2026. Additionally, the company plans to increase its share repurchase program significantly in the upcoming fiscal year.
In related developments, Starboard Value LP, a major shareholder, has announced plans to nominate three new candidates for Autodesk’s board of directors, aiming to enhance accountability and strategic direction. Meanwhile, Stifel and Oppenheimer have both adjusted their price targets for Autodesk, lowering them to $310 and $300, respectively, while maintaining positive ratings. These adjustments reflect considerations of the current macroeconomic environment and Autodesk’s ongoing strategic initiatives.
Furthermore, board member Betsy Rafael will not seek re-election at Autodesk’s 2025 Annual Meeting, marking the end of her influential tenure. Autodesk has been actively engaging with shareholders and responding to Starboard’s criticisms by emphasizing its strong financial performance and shareholder value initiatives. The company remains committed to its strategic goals despite ongoing challenges and external pressures.
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