Autodesk stock drops 6% on soft guidance, analyst downgrade

(Updated – November 22, 2023 5:47 AM EST)

Autodesk (NASDAQ:) shares fell nearly 6% in pre-market Wednesday following the reported Q3 results, with EPS of $2.07 coming in better than the consensus estimate of $1.99.

Revenue grew 10% year-over-year to $1.41 billion, beating the consensus estimate of $1.39B. Total billings fell 11% to $1.204B.

“Overall market conditions and the underlying momentum of the business remained similar to the last few quarters. Our financial performance in the third quarter was strong with much of the outperformance coming from larger-than-expected expansions of existing EBAs. Given that, we are raising revenue, earnings per share, and free cash flow guidance,” said CFO Debbie Clifford.

The company expects Q4/24 EPS to be in the range of $1.91-$1.97, compared to the consensus of $2.01, and revenue in the range of $1.42-$1.44B, compared to the consensus of $1.43B.

For the full year, the company expects EPS in the range of $7.43-$7.49, compared to the consensus of $7.46, and revenue in the range of $5.450 – $5.465B, compared to the consensus of $5.43B.

However, shares were hit by the introduced FY25 guidance. Autodesk sees its revenue rising 9% in FY25, which fell short of its mid-term framework of 10-15%.

“Lower-than-expected FY25 revenue growth coupled with a potential margin pullback (re: transaction model) is likely to prolong Autodesk’s return to a Rule of 45 company,” analysts from Goldman Sachs said in a note.

“We see more downside than upside risk to expectations in the coming Q’s. As such, we reiterate our Sell rating and $180 Price Target.”

Analysts from Piper Sandler went a step further and downgraded shares from Overweight to Neutral with a price target of $215 per share.

“We believe the market takes a long-term approach to valuing franchises like ADSK; and it may take time to build investor confidence in the 10-15% growth / Rule of 45 framework,” they wrote.