This company is currently trading above fair value, but its high customer-switching costs, recent internal investments, and large user network are reasons to put it on your watchlist.
Andrew Lange: Autodesk is a market-leading provider of computer-aided design, or CAD, software. We think the company is deserving of a wide economic moat based upon high customer-switching costs and its large network of users.
The company's clients are averse to switching given the time required to learning a new platform, the risk of downtime, and the monetary cost associated with switching. We think Autodesk will remain a market leader over the long term given its commitment to evolve to changing market trends. And recent investments in mobile and social suites and cloud-based solutions exemplify this.
In addition, the company is currently switching to a subscription-based pricing model, which will provide it with greater recurring revenue, greater long-term value, and more financial predictability.
We currently have a $51 fair value estimate on the company. We would recommend that investors seek a wider margin of safety before investing, but the company is a high-quality name and one which they should keep on their radars.
