Design software company Autodesk (ADSK) is gearing up to report its first quarter earning results today, May 27, after the market closes. Ahead of the results, five-star RBC Capital analyst Matthew Hedberg has set out his earnings preview, while reiterating a buy rating and $205 price target (3% upside potential).
“We remain conservatively below consensus for FY/21 based on COVID-related impacts, but bullish on their long-term opportunity” the analyst wrote. “For the quarter, we expect some upside to our Q1 expectations but believe management likely remains appropriately conservative for the balance of FY/21 due to COVID” he added.
Specifically, Hedberg is now expecting some upside to his previously reduced Q1 estimates, but a reduced full year outlook vs original guidance, with Q1 revenue of $860.5M (+17% y/y) vs consensus of $874M (+19%); Q1 subscription revenue of $780.5M (+31%) vs consensus of $793M (+33%) and; Q1 FCF of $196.8M vs consensus of $272M.
For FY/21 he is looking for revenue of $3,701M (+13%) vs guidance of $3,960M (+21%) and consensus of $3,803M (+16%) and FY/21 FCF of $1,439M vs guidance of $1,660M and consensus $1,487M.
Investor sentiment is veering towards the low-side heading into earnings, says Hedberg, but he “continues to believe ADSK remains well-positioned to deliver on its FY/23 guidance benefiting from multiple drivers…and time.” From the analyst’s reseller survey, he notes strong renewal trends and an uptick in 360 usage (particularly BIM360 Design), offset by challenges to new business and shorter contract duration.
“We feel the new-normal coming out of COVID could be faster adoption of the company’s cloud portfolio, which should be a source of competitive differentiation” he says.
Interestingly, as the RBC analyst points out, ADSK peers outperformed consensus sales estimates in their most recent quarter by 1.4% on average but reduced their FY revenue outlook by an average of 5.4% due to a more challenging selling environment.
The day after earnings, the group traded on average 2.3% lower as sentiment was low into earnings, but are since up +6.2%, Hedberg writes.
Overall, ADSK shows a cautiously optimistic Moderate Buy analyst consensus with 9 recent buy ratings, 4 holds and 3 sells. Meanwhile the average analyst price target of $195 indicates 2% downside potential from current levels. Shares are currently trading up 9% year-to-date, with a 2.5% gain over the last five days. (See ADSK stock analysis on TipRanks).
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