Survey Says Autodesk Is Likely To Benefit From Consumer Trends

Design software and services company Autodesk, Inc. ADSK is on the cusp of reaping rich rewards from strong customer momentum, according to a proprietary customer survey by Guggenheim.

The Analyst 

Guggenheim analyst Nate Cunningham upgraded shares of Autodesk from Neutral to Buy and increased his price target from $110 to $150.

The Thesis

Autodesk is experiencing positive underlying consumer trends, while the potential for an expansion in total addressable markets that could drive above-consensus net subscriber additions, Cunningham said, citing the proprietary survey. (See Cunningham's track record here.)

The survey covered 250 Autodesk customers in the U.S. to measure attitudes toward the company's products and model transition, as well as future buying intentions, the analyst said.

A significant number of existing maintenance customers are not overly concerned with future price increases, according to Guggenheim. The survey also revealed that Autodesk has substantial pricing power and enjoys "strong brand and product loyalty," Cunningham said. 

"Taken together, the survey results suggest that Autodesk is well-positioned to continue executing on its subscription transition, and that management's long-term targets are likely achievable."

Autodesk is expanding its addressable market by making inroads into strategic areas, including the construction market and non-subscribing users, according to Guggenheim. Even with the eventuality of the maintenance churn rising with future price hikes by Autodesk, the opportunities can more than offset the impact, the survey found. 

Based on indications that a majority of customers would remain on maintenance plans despite price increases, Guggenheim slightly raised its long-term maintenance subscriber estimates.

"We are modestly slowing the pace of maintenance to subscription conversion in our model for FY19/20, though we are leaving our subscription plan subscriber estimates largely unchanged to account for a higher number of new customers coming to the platform."

The Price Action

Autodesk stock has been up a solid 66.18 percent year-to-date period compared to the S&P 500's 15.38 percent gain.

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Photo courtesy of Autodesk.