(ADSK) Autodesk Reaffirms Outlook

In the recently concluded investor meeting, Autodesk Inc. (ADSK) reiterated its second quarter 2012 and fiscal 2012 guidance, supported by the steady growth in demand for its products.

Autodesk in the recently concluded quarter had witnessed strong revenue growth across all segments and markets. Revenues not only beat the Zacks Consensus Estimate but also surpassed management’s guidance range. Earnings per share (EPS) came in line with the Zacks Consensus Estimate.

Autodesk witnessed year-over-year growth across all of served geographies. Its international businesses also contributed to the strong revenue growth in the quarter. Revenue from emerging economies represented 15.0% of the total revenue in the quarter and was significantly higher when compared on a yearly basis.

Second Quarter 2012 & Fiscal 2012 Estimates

For the forthcoming quarter, Autodesk expects revenues in the range of $530.0 million to $545.0 million. The Zacks Consensus Estimate pegs it at $540.0 million (high end of the guided range).

The GAAP EPS is expected in the range of 25 cents to 29 cents. Non-GAAP EPS is projected at between 37 cents and 41 cents for the quarter, which excludes 8 cents related to stock-based compensation expense, and 4 cents for the amortization of acquisition related intangibles, net of tax. The Zacks Consensus estimate for the quarter (which includes stock based compensation) is currently 34 cents.

Net revenue for fiscal 2012 is expected to increase by approximately 12.0% compared to fiscal 2011. Autodesk anticipates fiscal 2012 GAAP and non-GAAP operating margins to increase by at least 200 basis points (bps) compared to fiscal 2011. The non-GAAP operating margin excludes approximately 60 bps of restructuring charges, 20 bps of intangibles amortization charges and a negative 50 bps of stock-based compensation expense.

Autodesk expects an effective tax rate of approximately 23.0% for GAAP results and approximately 25.0% for its non-GAAP results.

Estimation Trend

With no significant news in recent months, none of the six analysts covering the stock changed their estimates in the last 30 days. Hence, the EPS estimate for the second quarter of 2012 and fiscal 2012 remained at 34 cents and $1.40, respectively.

Most of the analysts covering the stock are optimistic about Autodesk gaining market share and its presence in the emerging markets that will likely drive the top-line and bottom-line going forward.

Our Take

We believe that with the improvement in macroeconomic conditions, Autodesk will see earnings growth in 2011 on the back of accelerating license revenue, maintenance and renewal rates. These growth drivers should remain in place, generating long-term gains for investors.

Moreover, Autodesk’s expanding product portfolio, and broadening industry and geographic reach will help it sustain its longer-term growth strategy of providing high-volume, lower-cost CAD software. We believe this will likely drive earnings going forward.

In our view, the company’s improvements and innovations in 3D design technology and product portfolio provides Autodesk a competitive edge. These innovations enable Autodesk to stay ahead of competitors like Adobe Systems Inc. (ADBE), Parametric Technology Corp. (PMTC) and Avid Technology Inc. (AVID).

Over the long term, we remain optimistic on the stock and have an Outperform recommendation, given positives such as Autodesk’s operating margin leverage and strong revenues, stability in its end markets, the increased demand for 3D products, expanding base in emerging market, a diversified product pipeline, cost control and strategic acquisitions. However, foreign exchange fluctuations remain a headwind.

Currently, Autodesk has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

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