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Investing.com -- Mizuho upgraded Autodesk (NASDAQ:ADSK) to Outperform from Neutral, raising its price target to $400 from $280.
Analysts pointed to the company’s successful rollout of its new transaction model and signs of a macroeconomic recovery as key drivers of upside potential.
According to Mizuho (NYSE:MFG), Autodesk’s new transaction model, which has been implemented across North America and Western Europe, is a game-changer.
"This model enhances efficiency, lowers sales process costs, and unlocks revenue synergies through improved cross-sell and upsell opportunities," the firm wrote.
They also highlighted incremental cost savings from reduced distributor commissions and improved control over discounting, which they believe will bolster margins. These changes are expected to drive Autodesk’s free cash flow to $15 per share by FY29.
The company is also said to be benefiting from improving macroeconomic indicators.
Mizuho pointed to the Architecture Billings Index stabilizing near 50 and the Dodge Momentum Index nearing 2022 highs as signs of a potential rebound in construction activity.
Additionally, Autodesk continues to outperform in manufacturing, driven by the success of Fusion and higher average selling prices, says Mizuho.
They add that while its Media & Entertainment segment faces lingering pressures from last year’s Hollywood strikes, the company’s international growth in construction and manufacturing is providing resilience.
Autodesk’s investments in generative AI and cloud solutions are also expected to support long-term growth. "Autodesk remains GenAI-resilient, leveraging AI to boost productivity for designers and architects while addressing the design talent shortage," Mizuho wrote.
The company’s focus on AI and cloud-based solutions enables real-time data access and project lifecycle connectivity.
Mizuho raised its FY26 and FY27 revenue and EPS estimates by 4-6% above consensus and expects a five-year compound annual growth rate (CAGR) of ~13%, up from ~11% pre-transition. The analysts concluded, "[We] see potential for multiple expansion over time, in line with verticals peers."