Autodesk (ADSK): Top Idea for 2016 - Cowen
Get Alerts ADSK Hot Sheet
Rating Summary:
23 Buy, 14 Hold, 3 Sell
Rating Trend: Down
Today's Overall Ratings:
Up: 6 | Down: 3 | New: 1
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Cowen analyst, Gregg Moskowitz, highlighted Autodesk (NASDAQ: ADSK) as one of his top ideas for 2016. ADSK is undergoing a model transition to subscriptionbased licensing, which we expect will meaningfully increase both the magnitude and visibility of revenue and profitability over time. The uptick in new model subscriptions, an intensified go to market strategy, and a newfound focus on cost controls. We also believe we will likely see a wave of perpetual buying in F4Q and F1H17.
ADSK shares have surged recently as investors dove into the co.'s L-T targets at a time when its valuation was especially low, and following the revelation that activist investor Sachem Head Capital Mgmt has taken a 5.7% stake. However, the analyst believes that L-T subscriber growth could be well above the guided 20% CAGR through FY20E, especially given that ADSK will likely convert more than its estimated 30% of non-subscribing customers over this period.
This would mean the company's projected CAGR of 3% is significantly too low given migration from lower-value maintenance customers. This would also provide ADSK with improved pricing power and cost benefits from an increase in electronic distribution as the company de-emphasizes less strategic channel partners.
No change to the Buy rating or the $75 PT based on a CY18E EV/FCF multiple of 20x.
For an analyst ratings summary and ratings history on Autodesk click here. For more ratings news on Autodesk click here.
Shares of Autodesk closed at $63.96 yesterday.
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