Wedbush Raises Price Target on Autodesk (ADSK) to $70 Following Reseller Checks
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Wedbush reiterated a Neutral rating on Autodesk (NASDAQ: ADSK), and raised the price target to $70.00 (from $60.00), following 3Q reseller checks. Results were mixed, but mostly in line with muted revenue expectations following the elimination of perpetual license sales. Most of our contacts saw revenue down Y/Y and unit volume up. Several contacts reported increased transaction volumes and higher subscription units, especially from smaller companies who find the entry price of subscriptions to be appealing.
Analyst Steve Koenig commented, "Our 3Q reseller checks suggest that ADSK’s net subscriber additions should be strong, but the 2H revenue outlook looks middling from the channel’s perspective (about 80% of revenue). The company is strategically focused right now on adding subscribers, as evidenced by its 3Q AutoCAD price reduction and LT promotion. This seems like an appropriate strategy, although we’re skeptical ADSK can achieve its $6/share FCF target in FY20 – even with a future price increase— given how long average revenue per subscription (ARPS) has been trending down. Accordingly, valuation looks full to us. We’re still on the sidelines; a better entry price and checks suggesting price/ volume catalysts could make us more positive, as well as continued improvement in global PMIs."
Shares of Autodesk closed at $75.52 yesterday.
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