Autodesk (ADSK) tumbles on soft guidance, negative tone; analyst downgrades

November 23, 2022 7:35 AM EST
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Price: $206.52 +2.26%

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    24 Buy, 11 Hold, 3 Sell

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Autodesk (NASDAQ: ADSK) delivered an in-line earnings report but soft guidance pushed shares lower in after-hours trading Tuesday. Moreover, the company slashed its full-year billings guidance.

Autodesk reported a Q3 EPS of $1.70 on revenue of $1.28 billion, in line with the average analyst estimates. While revenue increased 14% year-over-year, the subscription net revenue came in at $1.19B, missing the estimate of $1.21B.

For this quarter, Autodesk said it expects EPS to come in at $1.80 (the midpoint), missing the $1.83 consensus. Revenue is seen between $1.303B and $1.318B, again below the $1.33B estimate.

ADSK lowered its full-year guidance for billings to a range of $5.57-5.67B from the prior $5.71-5.81B, and lower than the consensus of $5.73B. The adjusted operating margin is seen at 36%.

The company also announced its Board approved a $5 billion stock buyback program.

The company’s CFO, Debbie Clifford, said on the earnings call that clients are shifting towards annual contracts and are generally less interested in multi-year invoicing.

Mizuho analyst Matthew Broome downgraded ADSK to Neutral from Buy with a $210 per share price target (down from $260).

"Given an increasingly uncertain operating environment, we find it difficult to continue recommending the name going into a more challenging FY24, and believe that a modest valuation discount to the broader enterprise software group is therefore justified," he explained in a downgrade note.

Oppenheimer analyst Ken Wong said that lowered billings and free cash flow guidance are “unlikely to satisfy investor appetites.” The analyst cut the price target to $220 from the prior $255 per share.

“We expect pressure on shares with investors looking for modest upside following positive partner commentary and peer group earnings,” Wong said in a note.

As of 07:35 EST (12:35 GMT), ADSK shares are down over 10%.

By Senad Karaahmetovic

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