Autodesk results may be far better than expected

Autodesk Inc. may outpace expectations with its upcoming quarterly results on stronger than expected sales of its software aimed at specific industry segments, as well as on upgrades to the latest version of its AutoCAD design- program, an analyst said Friday.


Brendan Barnicle, an analyst at Pacific Crest Securities, said that his initial checks with North American and European resellers of Autodesk (ADSK) products showed business in the current quarter to be tracking in line with the previous quarter. That’s in contrast to his expectations for a slowdown for the period that ends this month.

The San Rafael, Calif.-based firm’s stock has given up more than a quarter of its value since its fiscal second quarter began, on apparent investor concern that growth might slow. In Friday trading, shares closed down 19 cents at $ 30.45.

“Investors had been very concerned that Autodesk’s business would slow in the second quarter, because the group of customers that might upgrade to AutoCAD 2007 is smaller than for previous products,” Barnicle told clients. “Yet our contacts have actually experienced accelerating business because of AutoCAD 2007.”

AutoCAD, a computer-aided design program, is widely used by engineers and architects for designing everything from household products to buildings and bridges.

Autodesk resellers are anticipating solid growth this fiscal year, with ongoing strength in its industry-specific products along with its three- dimensional design software, according to the analyst. He rates the company’s stock outperform with a $50 target price.

What’s more, Barnicle’s contacts haven’t seen a slowdown in sales from the housing market for Autodesk, he said.

Even if the U.S. housing market suffered a significant slowdown, it would only affect about 5% of Autodesk’s total revenue, he estimated.

“In addition, our contacts have noted that when housing does slow, the home builders should go back and build the infrastructure that they have neglected due to the exceptionally strong housing market,” Barnicle commented.

Autodesk’s civil-engineering products are used for such infrastructure projects.

Barnicle’s upbeat observations echoed similar comments made earlier in the week by Oppenheimer & Co. analyst Sasa Zorovic.

Zorovic reiterated a buy recommendation on Autodesk’s stock, saying the company’s fundamentals are intact and its shares attractively valued.

He said the company’s customers and resellers continue to report “strong demand” across its products.

The company is solidly positioned to grow its top line as customers migrate to 3-D products and on infrastructure and commercial development in emerging countries, Zorovic told clients. Autodesk also will benefit from the replacement of outdated infrastructure in the United States, Europe and Japan, he said.

On average, analysts are currently expecting Autodesk to post a profit of 35 cents a share, without items, on revenue of $446.7 million for the second quarter, according to Thomson First Call. That’s up from 29 cents a share and $ 373 million in the comparable period of last year.

In May, Autodesk reported fiscal first-quarter results that were ahead of analysts’ expectations and offered an upbeat forecast for the year.

For the current quarter, the firm pegged its net profit at 26 cents to 28 cents a share on revenue ranging from $440 million to $450 million. Without charges for stock options and acquisition related items, the company said that it was targeting a profit of 34 cents to 36 cents a share.