UBS Remains Sidelined on Autodesk (ADSK) Following 2Q Beat
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UBS reiterated a Neutral rating on Autodesk (NASDAQ: ADSK), and raised the price target to $66.00 (from $58.00), following the company's 2Q earnings report. ADSK reported revenues of $551M and EPS of 0.05, ahead of $510M and -0.14 estimates.
Analyst Brent Thill commented, "Last chance buying of perpetual licenses drove a $40M Q2 rev beat and also created a $38M backlog. New model sub adds of 125K was respectable after Q1's 140K that benefited from promos & Q4 EBAs. Starting this Q4, recurring revs should represent ~95% of total revs, significantly improving visibility. In the LT, ADSK has the potential to be highly predictable & profitable as the subs base grows from current 2.8M vs. TAM 100M+ and op mgn expands from UBSe -7% this yr twd LT 30%+. However, near term path could still be uneven as: 1) new model subs need to grow fast enough to more than offset churn in the maint subs base, and 2) ARPS growth could be hampered by the mix of subs and promotions. The FY2020 goal of $6 FCF/share does seem more achievable to us than before, although tightly managed execution will be paramount."
Shares of Autodesk closed at $63.70 yesterday.
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