Autodesk Can't Please Finicky Street

Updated from May 18

Autodesk (ADSK Quote - Cramer on ADSK - Stock Picks), which raised guidance at its analyst day in March, handily beat first-quarter estimates after the close Tuesday and boosted its outlook for the full fiscal year for a second time.

But the company also said second-quarter earnings could fall short of estimates, even on stronger-than-expected sales. Investors appeared to be honing in on that lower-than-expected operating margin; recently, shares of Autodesk were down $1.59, or 4.7%, to $32.10.

Rich Parower, portfolio manager of the Seligman Global Technology fund, cautioned Tuesday against reading too much into the initial reaction to Autodesk's guidance, noting the company should be able to achieve the higher end of its range. "They've got a lot of product and market momentum behind them right now," said Parower, whose firm is one of the top holders of Autodesk shares. "They had very strong results" in the first quarter.

Analysts echoed that sentiment Wednesday and advised investors to buy on weakness. "The fundamentals have strengthened in our view, and with raised annual guidance the stock is relatively less expensive than it used to be," Oppenheimer analyst Sasa Zorovic wrote in a note Wednesday. (Zorovic has a buy rating on Autodesk; Oppenheimer hasn't done any banking with the company.)

Piper Jaffray analyst Gene Munster believes the Street is overreacting to tweaks in the expense structure. "It's not that the operating margin is getting worse; it's more that the Street wants the operating margin to increase at a higher rate, given the revenue upside," he wrote. But "we believe managing to an operating margin target and investing incremental revenue into growing the Autodesk business is the right strategy to better position the company for the long term." (He has an outperform rating on Autodesk; his firm hasn't done banking with the company.)

« Previous Page

1 2 3

Next Page »