Is it safe to buy Autodesk stock as shares plunge 16% after earnings?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 24, 2021
  • Autodesk shares on Wednesday declined by more than 16% after reporting FQ3 results.
  • The company announced its most recent quarterly results Tuesday after markets closed, beating estimates.
  • However, it issued weaker than expected guidance on FQ4 revenue and earnings.

On Wednesday, Autodesk Inc. (NASDAQ:ADSK) shares plunged more than 16% after releasing its most recent quarterly results. The company announced its FQ3 revenue and earnings Tuesday after markets closed, beating analyst expectations. However, the company issued FQ4 revenue and earnings below estimates.

Autodesk posted FQ3 non-GAAP EPS of $1.33, beating the analyst estimate of $1.26. In addition, its GAAP EPS of $0.61 was ahead of the consensus of $0.54, while revenue increased by 18.7% from the same quarter in 2020 to $1.13 billion, $10 million ahead of expectations.

Autodesk’s exciting growth?

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

From a valuation perspective, Autodesk shares trade at steep trailing 12-month and forward P/E ratios of 42.58 and 36.30, respectively, making the stock less compelling to value investors.

However, the company offers exciting growth prospects with analysts expecting earnings to grow by more than 440% this year, before rising at an average annual rate of 26.37% over the next five years.

Therefore, Autodesk’s growth prospects could be driving its premium valuation.

Source – TradingView

Technically, Autodesk shares seem to have recently plummeted to complete a downward breakout from an ascending channel. As a result, the stock has fallen deep into oversold conditions, creating a perfect opportunity for a rebound.

Therefore, investors could target potential rebounds at about $265.23, or higher at $276.18, while $243.34 and $229.93 are support levels.

Conclusion

In summary, although Autodesk shares still trade at steep valuation multiples, the recent decline seems to have created an exciting opportunity to buy.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

  1. Etoro, trusted by over 13m users worldwide. Register here >
  2. bitFlyer, simple, easy to use and regulated. Register here >