On Jun 18, 2013, Zacks Investment Research downgraded
Autodesk Inc. (
to a Zacks Rank #5 (Strong Sell).
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Why the Downgrade?
The downgrade primarily reflects Autodesk's dismal first quarter
2014 result as well as the gloomy outlook that lowered estimates.
The company reported earnings (including stock based
compensation) of 31 cents per share, which lagged the Zacks
Consensus Estimate by 4 cents.
Revenues decreased 3.1% year over year to $570.4 million, which
also failed to beat the Zacks Consensus Estimate of $586 million.
Significantly, revenues declined in all regions, with Asia
Pacific down 3.0% from the year-ago quarter, EMEA down 4.0% year
over year and the Americas down 3% year over year in the reported
The decline in revenue base had a negative impact on margins.
Gross margin contracted 160 basis points, while operating margin
declined 60 bps from the year-ago quarter.
The disappointing result pushed Autodesk to revise fiscal 2014
outlook. The company lowered its revenue growth guidance to
3.0% from 6.0% for 2013. Autodesk expects operating margins to
expand 50 - 100 bps, down from the earlier forecast of a 125 -
150 bps expansion compared to fiscal 2013.
For the second quarter, Autodesk expects revenues in the range of
$550.0 -$570.0 million and earnings of 39 - 44 cents per share.
The Zacks Consensus Estimate for the second quarter of 2014
declined 23.8% (10 cents) to 32 cents over the last 30 days.
The Zacks Consensus Estimate for 2014 decreased 9.0% (15 cents)
to $1.52 per share over the last 30 days. The Zacks Consensus
Estimate for 2014 dropped 10.5% (21 cents) to $1.79 per share
over the same period.
Other Stocks to Consider
Not all software providers are performing as poorly as Autodesk.
SAP AG (
, as both have a Zacks Rank #1 (Strong Buy).
Dassault Systemes SA (
which has a Zacks Rank #2 (Buy) is also looking good at