Autodesk reported impressive second-quarter fiscal 2015 results.
Both revenues of $637 million and earnings of $0.21 per share beat
the Zacks Consensus Estimate. The company provided an upbeat
guidance for the third quarter. We believe that increasing
competition from the likes of Adobe pose a major concern for the
company. Moreover, increasing investment in new products is
expected to hurt margins in the near term. However, we believe that
the company has significant growth opportunities in the AEC and
manufacturing markets going forward. Further, the business
transition to cloud-based offerings will boost its profitability in
the long run. Additionally, its efforts to expand its mobile
applications for iOS as well as Android platforms will drive growth
going forward. Thus, we upgrade ADSK shares to Outperform and set a
target price target of $71.00.
San Rafael, CA.-based Autodesk (ADSK) develops model-based
design, engineering and documentation software and also offers
consulting, support and training services. Autodesk's software
helps customers to imagine, design and create digital prototypes of
their ideas. Through the company's software they can visualize,
simulate and analyze the real-time performance of these digital
Autodesk serves customers in architecture, engineering and
construction manufacturing and digital media and entertainment
industries. Autodesk operates in four segments: Platform Solutions
and Emerging Business and Other (PSEB), Architecture, Engineering
and Construction (AEC), Manufacturing Solutions (MFG), and Media
and Entertainment (M&E). The company also offers design and
creation suites that combine multiple products across segments.
The PSEB (35.0% of fiscal 2014 revenues) segment consists of
AutoCAD (computer-aided design application) and AutoCAD LT. AutoCAD
is used for designing, drafting, detailing and visualization and is
the company's largest revenue-generating product. AEC (32.0% of
fiscal 2014 revenues) segment offerings primarily include Autodesk
Revit customized for building information modeling (BIM). The MFG
(25.0% of fiscal 2014 revenues) segment offers digital prototyping
solutions to manufacturers in automotive and transportation,
industrial machinery, consumer products and building products
industries. The M&E (8.0% of fiscal 2014 revenues) segment
includes two product groups Animation (3ds Max and Maya software)
and Creative Finishing.
Autodesk's revenues declined 1.7% year over year to $2.27
billion in fiscal 2014. License and other (55.0% of revenues)
declined 8.0% year over year, while Subscription (45.0% of
revenues) climbed 7.5% from fiscal 2013. The company's flagship
products (AutoCAD, AutoCAD LT, AutoCAD Civil 3D, AutoCAD
Mechanical, AutoCAD Architecture, Autodesk 3ds Max and Autodesk
Maya) accounted for approximately 51% of revenues in 2014. Design
and creation suites accounted for approximately 34.0% of revenues,
while new products contributed 14.0% of revenues in fiscal
Autodesk distributes its products and services primarily through
indirect channels (approximately 2,500 resellers), which accounted
for 84.0% of the 2014 revenues. Sales through its largest
distributor, Tech Data Corp, accounted for 24.0% of 2014
Autodesk faces significant competition in most of its operating
segments from the likes of Adobe, ANSYS, Bentley Systems, Dassault,
Google Inc., Parametric Technology, Siemens Product Lifecycle
Software and Trimble Navigation Limited.
Autodesk Inc. (ADSK): Read the Full Research
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