The transition the broker is referring to is the shift from a “license per user” model, with its lumpy revenue stream, to a “software-as-a-service” platform.
Having picked over Autodesk’s first quarter results, Wedbush is convinced the transition is settling into a more consistent, predictable pattern and that the company can at least get close to its full-year targets for 2020
“These targets are beginning to look less aggressive as ADSK is raising maintenance prices, repurchasing shares at an accelerated rate stabilizing its pricing (ARPS), and having success converting non-paying legacy customers to sUBScriptions,” Wedbush said as it raised its price target from US$120 to US$125.
“End-market conditions have also stabilized over the last twelve months, and any progress on US infrastructure legislation could be a catalyst,” it added.
Subscription revenue doubled in the first quarter to US$692mln.
Maintenance upgrades to locally installed versions of the software brought in US$1.05bn, down 7% from a year earlier.
Canaccord Genuity has also raised its price target for the software firm, shifting from US$105 to US$120.
Pacific Crest is a little less enthuiastic, cranking up its target price from US$105 to US$115.
Meanwhile, Autodesk has been upgraded to ‘outperform’ from ‘sector perform’ at RBC Capital
The former has been upgraded to ‘buy’ from ‘neutral’ at Sidoti & Co.
Customer relationships management software giant Salesforce, meanwhile, has been attracting a bit more attention, as befits a US$64bn company.
Its price target has been raised to US$104 from US$98 at MKM Partners and to US$102 from US$95 at JP Morgan.
The stock currently trades at just over US$87.
That’s too cheap, reckons Wunderlich, which values the stock at US$103, up from US$101 previously.
The shares were down 87 cents at US$22.32, having initially risen above US$24 on the back of the results.
Sector peer Wal-Mart Stores inc’s (NYSE:WMT) stock price target has been hiked to US$80 from US$73 at UBS, and it is not the only one wielding the blue pencil.
Just as UBS caught up with Susquehanna Financial’s US$80 valuation, Susquehanna upped its target to US$92.
Elsewhere, Wal-Mart was upgraded to ‘market perform’ from ‘under-perform’ at BMO Capital in the wake of yesterday’s halfway decent quarterlies.