’Reddit is built for this moment’ - Stock soars on crushed earnings
Investing.com -- DA Davidson upgraded Autodesk (NASDAQ:ADSK) to Buy from Neutral, saying the software company is now positioned to deliver stronger earnings and close the gap with top-performing peers after years of underperformance.
The brokerage said recent improvements in Autodesk’s cost structure, governance, and execution, particularly under CFO Janesh Moorjani, suggest the company is on a path to reach top-quartile operating performance within the vertical and back-office software group.
“Autodesk remains only just above the peer median for GAAP operating margins,” analysts wrote, but added they see “significant opportunity” for the company to improve margins over the next few years and ultimately reach “top decile” levels.
DA Davidson also highlighted Autodesk’s growing presence in construction software. Its Construction Cloud unit is gaining share, the firm said, even as overall U.S. activity slows.
Mid-20% organic growth in the unit has narrowed the gap with rival Procore, and DA Davidson said Autodesk’s pricing and product integration offer a compelling value for customers.
While a shift in Autodesk’s transaction model could introduce near-term noise in margins, the firm expects operational efficiencies and better alignment around stock-based compensation to enhance per-share value.
DA Davidson raised its price target on the stock to $375 from $305, reflecting an enterprise value of $81 billion, or roughly 29 times next twelve months EBITDA. Autodesk currently trades at 32 times forward earnings and 31 times free cash flow.
Shares of Autodesk are up about 30% year-to-date.