hapabapa
Weakness in the Architecture Billings index has historically hurt Autodesk’s (NASDAQ:ADSK) stock, but Baird believes the construction software firm could shrug off the negativity, given “silver linings” in the report.
“One silver lining in the March report is that design work coming under contract, the leading indicator of future billings, remained at 50.0 vs. 51.1 MoM; this is ‘healthier’ than when ABI was near 45 during Fall 2023,” analyst Joe Vruwink said.
“Additionally, we still contend that the mix of billings is net favorable for Autodesk, with Institutional markets remaining near 50 (49.9 vs. 49.4 MoM, reported on L3M average) and weakness within residential and commercial/industrial,” Vruwink added. He has an Outperform rating and $296 price target on Autodesk shares.
Despite the optimism, Vruwink conceded that Autodesk could see a “more challenged” environment in the near-term, amid the decline in the ABI, as well as an increase in the consumer price index and the rise in yields for the 10-year U.S. Treasury.
Looking 12 months out, Autodesk could be higher between 20% and 30% as “absolute lows in ABI readings tend to coincide with lows in Autodesk sentiment and valuation for that particular cycle,” Vruwink added.
