Jefferies & Co. raised its price target on shares of Autodesk, Inc. (NASDAQ: ADSK) to $47 from $42, while maintaining its hold rating.
Our latest ADSK survey shows further improvement in fundamentals and we raise our estimates to reflect this. Clearly, we were too early to downgrade the stock last year. But, looking afresh given current valuation, growth expectations and sentiment, we view the risk reward as more balanced. Our latest channel work suggests estimates have an upward bias for the year and we reflect that in our forecast changes, said Ross MacMillan, an analyst at Jefferies.
The brokerage raised its fiscal 2012 EPS estimate for Autodesk to $1.73 on revenue of $2.21 billion from $1.62 on revenue of $2.156 billion, and its 2013 estimate to $2.08 on revenue of $2.474 billion from $1.93 on revenue of $2.381 billion. Street estimates are at $1.65 on revenue of $2.16 billion and $1.98 on revenue of $2.40 billion.
Clearly MacMillan was too early to downgrade the stock last year. But the last about 50 percent increase in stock price has been more about multiple expansion than earnings revisions. She thinks the current multiple is fair given our expectations for sales growth and maintain hold rating on the stock.
The channel expects up 6 percent sequential license growth for the April quarter. This is the best sequential growth expectation from MacMillan's survey since January 2010. Adjusting for direct business (which will fall sequentially in the April quarter) she has slightly raised current estimate to slightly above the high end of the range.
Sequential license growth for the July quarter is expected to be up 4 percent and assuming constant seq direct business, leads MacMillan also to raise July quarter estimate. For fiscal 2011, channel expectations increased to up 11 percent year-over-year from up 7 percent year-over-year last survey.
MacMillan takes fiscal 2011 total revenue growth estimate from up 10 percent year-over-year to up 13 percent year-over-year when she include direct sales assumptions and foreign exchange. Finally, long term growth expectations moves from up 10 percent last survey to up 14 percent this survey.
MacMillan said maintenance renewal rates appear to have picked up again (at a 5 quarter high). Manufacturing demand continues to trump construction demand -- a key questions remains when we might see construction turn.
MacMillan said new suites are viewed positively by the channel, although growth expectations from suites remain modest. New simulation tools are viewed as a modest positive by the channel. Autodesk seems to have run more aggressive promotions in the last three months.
Autodesk stock closed Friday's regular trading down 0.04 percent at $44.98 on the NASDAQ Stock Market.