Canaccord Reviews Autodesk's 'Squishy' Q3, Hopes To Buy The Dip

Autodesk, Inc. (NASDAQ: ADSK) reported fiscal third quarter results after the close Tuesday, posting 5.3 percent revenue growth to $515.3 million and a narrower non-GAAP loss of 12 cents per share.

The results exceeded estimates.

Autodesk's fourth quarter and fiscal 2017 non-GAAP earnings per share guidance could at best meet, or miss expectations.

The Analyst

Canaccord Genuity analyst Richard Davis, who said a "squishy quarter" pulled investor focus to the nearer term, maintained a Buy rating and

decreased his price target for the shares from $140 to $135.

The Thesis

The negative stock reaction can be traced to the below-par subscription additions and annualized recurring revenue, or ARR, as well as the recent run in the stock, Davis said in a Wednesday morning note. (See Davis' track record here.) 

Although Davis said he hoped to pick up Autodesk shares in the $105-109 range, but said the quarter is "almost certainly just a normal 'hiccough' in an extremely complex business model transition," and the stock is likely to stop at the $116 level, he said. 

Longer-term, Autodesk could double to $200-$250 within five years, if the $11 free cash flow target for 2022 is even roughly close, Davis said. The analyst sees last night's discomfort and stock dip as offering a nice entry point.

"Our rating remains BUY at current prices, but we get especially bullish if we get lucky and the stock pulls back a bit more over the next few days." 

The Price Action

Autodesk shares are up a solid 55 percent in the year-to-date period.

The shares were bid down 11.50 percent to $115 in pre-market trading.

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Photo courtesy of Autodesk.