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Bear of the Day: Autodesk (ADSK)

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Autodesk (ADSK - Free Report) is a Zacks Rank #5 (Strong Sell) that develops model-based design, engineering and documentation software. The company focuses on customers in architecture, engineering and construction, product design and manufacturing; and digital media and entertainment industries.

The stock has been hot over the last year, up well over 100% from the March 2020 lows. However, valuation has come into question and the stock has fallen 14% from recent highs and is threatening to break technical support.

About the Company

Autodesk is headquartered in San Rafael, CA and employs over 11,000 people. The company was founded in 1982 and sells its products and services to customers directly, as well as trough a network of resellers and distributers.  

ADSK is valued at $61 billion and has a Forward PE of 57. The company holds a Zacks Style Score of “D” in Value, but “B” in both Growth and Momentum.

Q1 Earnings

Autodesk reported decent earnings in late May, with revenues coming in above expectations and a 9% beat on EPS. The company also raised its FY22 revenue outlook and guided Q2 around expectations. However, they cut both its FY22 EPS range and its operating margins were cut to 30-31%. The margins, which were taken down for acquisition integration expenses, are an issue as investors have high expectations for a ramp in business and cash flow growth next year.

Since earnings the stock has fallen over 5% and analysts are dropping estimates.


While the upcoming quarter looks about flat, the next quarter and current year are starting to slide. Over the last 7 days, next quarters numbers have fallen from $1.33 to $1.25, or 6%. For the current year, estimates have fallen about 2% over that same time frame.

Autodesk, Inc. Price and EPS Surprise

Autodesk, Inc. Price and EPS Surprise

Autodesk, Inc. price-eps-surprise | Autodesk, Inc. Quote

The revenue guide higher was mostly due to acquisitions and US revenue only grew 8%, the lowest in two years. Investors are now have questions about the valuation as the stock comes to critical technical support.

Technical Take

ADSK is well off its 2021 highs and below the 50-day moving average. The stock is trading right at the 200-day moving average at $274 and threatening to break this important technical support area.

Bulls have held this spot and forced a bounce over three times this year. If it fails this time, expect some stop runs below $270 and the stock to drop to the $230 support levels that were established in the summer of last year.

In Summary

At the very least, Autodesk is in for some choppy sideways action as investors deal with the margin issues and slow growth. If the market sells off, we could see the 200-day break and force some selling.

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