Autodesk Stock Slides Following Disappointing Guidance

Shares of Autodesk (ADSK), a leading software provider for computer-assisted design, experienced a 6.6% drop to $203.25 in premarket trading on Wednesday. Analysts attribute this decline to the company's latest guidance.

In its fiscal third-quarter results announced on Tuesday, Autodesk projected fourth-quarter revenue between $1.42 billion and $1.44 billion. This fell slightly short of Wall Street's forecast of $1.43 billion. Moreover, the company's adjusted earnings are anticipated to be between $1.91 and $1.97, below analysts' estimate of $2.01. Despite these figures, Autodesk raised its outlook for fiscal year 2024, encompassing revenue, adjusted earnings, and free cash flow.

Looking further ahead, management anticipates a approximately 9% or more increase in revenue for fiscal year 2025, which aligns with the previous year's performance but falls below market consensus. In response, Mizuho Securities analyst Matthew Broome stated in a report on Wednesday that "this subdued guide is largely reflective of a more challenging operating environment." Keeping a Neutral rating, Mizuho reduced its price target from $220 to $200 while revising estimates.

Citi analyst Tyler Radke described the 2025 guidance as "complex," but also highlighted reasons for optimism. Radke noted that with a high single-digit growth target, there may be potential for upside if macro trends stabilize or recover. Consequently, Citi affirmed its Buy rating, adjusted its price target from $261 to $243, and increased estimates.

Meanwhile, William Blair analysts Dylan Becker and Faith Brunner voiced confidence in Autodesk's offerings. They stated, "The continued healthy pipeline activity evidenced throughout the duration of the year highlights both the strategic importance of the company's tools and the resiliency of its diversified end market exposure, which remains well positioned to support several years of digitization momentum." They rated the company's shares as Outperform.

In terms of Autodesk's fiscal third quarter performance, the company exceeded expectations in both revenue and earnings. Ultimately, industry experts remain divided as to the future prospects of Autodesk.