Analyst Note| Julie Bhusal Sharma |
Wide-moat Autodesk ended its fiscal 2021 on a high note, surpassing our top- and bottom-line expectations. Nonetheless, its outlook for fiscal 2022 is more moderate than we had forecast even after making adjustments for last quarter’s results, which included a strong warning about the lagging effects of COVID-19 due to the nature of the subscription model. Despite the more moderate 2022 in the cards, we’ve improved the outlook in the outer years of our forecast due to our increased confidence in Autodesk's growth opportunities, both organic and inorganic. With the announcement of its intent to acquire water infrastructure software company Innovyze the day before fourth-quarter results, we think Autodesk is maintaining a realistic balance of organic versus inorganic R&D to maintain its standing as the simulation software stalwart. Consequently, we are raising our fair value estimate to $209 per share from $198. The shares were down after the results, trading near $278 after hours, leaving Autodesk overvalued and still trading above our bull-case fair value of $255 per share. Still, the gap between our fair value estimate and the market is not indicative of a poor perception of Autodesk. We continue to consider it a very high-quality company with significant potential for the top and bottom lines--just not to the extreme extent that the market is factoring in.