Autodesk Named a “Top Pick” by Morgan Stanley—Is It Time to Buy?

Core Viewpoint - Autodesk is recognized as a leading technology company providing digital solutions for architecture, engineering, and construction (AEC), with a strong focus on software products and a recent endorsement from Morgan Stanley as a top investment pick [1][3]. Group 1: Company Overview - Autodesk primarily develops software for AEC, with 47% of total revenue coming from AEC-specific software products last quarter [3]. - The AutoCAD brand, widely used across various industries, contributed 26% to total revenue last quarter [3]. - The company generates nearly all its revenue from subscriptions, with 63% of sales in fiscal 2024 coming from distributors and resellers [4]. Group 2: Financial Performance - Autodesk has demonstrated solid revenue growth of 10% to 12% over recent quarters, with the "make" division experiencing a 25% revenue increase last quarter, up from 15% a year ago [6]. - The adjusted operating margin has improved by 300 basis points since fiscal 2023, with a target margin of 38% to 40% [7]. - Morgan Stanley projects that the GAAP operating margin could expand by up to 800 basis points by 2028, indicating significant room for margin improvement [8]. Group 3: Strategic Initiatives - The company aims to transition to more direct sales to enhance customer data access, pricing control, and revenue growth [4]. - Autodesk plans to increase the adoption of its technology across the entire lifecycle of physical projects, focusing on expanding its "make" business alongside its established design software [5][9]. - The strategy to become an end-to-end solution provider could allow Autodesk to sell design and make products together, further enhancing margins [9].