Autodesk Is 'Tracking For Sustainable Long Term Growth,' Rosenblatt Says

Autodesk, Inc. ADSK has entered a period of stable growth, having almost completed its transition to a recurring revenue model, according to Rosenblatt Securities.

The Autodesk Analyst: Blair Abernethy initiated coverage of Autodesk with a Buy rating and a price target of $320.

The Autodesk Thesis: The new model improves visibility into revenue generation and gives the company control over its business for the medium term, Abernethy said in the initiation note.

“Autodesk’s TAM is estimated at $52b in FY21, compared to trailing revenues of ~$3.8b, equating to a ~7% penetration level. The Company believes its TAM should grow to $69b (or by ~33%) by FY25, represented by $31b in AEC, $18b in Design, and $13b in the Media & Entertainment segments,” he wrote.

“Our checks and recent data points indicate that the overall planned pace of enterprise Digital Transformation programs is accelerating. We view CAD/CAM tool chains, product lifecycle and product data management, and Building Information Management (BIM) technologies as important components of enterprise Digital Transformation programs in Autodesk’s core vertical markets,” the analyst pointed out.

Referring to non-compliant users, Abernethy said the company has been proactively pursuing this opportunity in recent years and this provides “a likely subscription revenue tailwind of at least 2-3% annually to Autodesk.”

ADSK Price Action: Shares of Autodesk had dropped 0.23% to $278.46 at the time of publication Tuesday.

(Photo: Autodesk)