Autodesk expected to post Q2 EPS of 61 cents

Autodesk Inc. (NASDAQ: ADSK) will report second-quarter 2020 earnings results after the closing bell on Tuesday, August 27. Analysts expect the software maker to report better earnings on higher revenues.

During the first quarter, Autodesk had missed market estimates on both revenue and earnings, sending shares sliding nearly 9%.  Total revenue of $735 million was up 31%, while adjusted EPS totaled $0.45.

The disappointing results left investors wondering if the company has hit a threshold for sales.

For the second quarter, analysts have projected a 29% growth in total revenues to $786.98 million, while the bottom-line projection is pegged at 61 cents per share. The management, meanwhile, expects revenue to be $782 million to $792 million. GAAP EPS is expected to be $0.13-0.17 while adjusted EPS is expected to be $0.59-0.63.  

While software-as-a-sales (SAAS) model is generally considered a highly profitable model, the fact that Autodesk caters to a niche segment narrows down its prospects. This is why the company is forced to shell out huge sums in marketing costs to reach out to maximum number of architects and engineers around the globe.

On the other hand, the company has high retention rates to its credit, given that users tend not to move away to rival software after years of training in Autodesk software. Hence even if the growth decelerates, solid recurring revenues should keep the stock momentum on.     

The stock has gained 12% in the year-to-date period. The stock has a 12-month average price target of $173.82, suggesting a 20% upside from the last close.  

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