Autodesk's Strong Q2 Results and Promising FY23 Outlook Supports Buy Rating and $385 Price Target

Autodesk reported strong Q2 results with growth in revenue, billings, operating income, and free cash flow. The company's guidance for FY23 shows continued strength, with increased targets for revenue, billings, and operating margins. Autodesk's shares are trading at a discount compared to peers, presenting a favorable risk/reward scenario for investors. Morgan Stanley analyst Elizabeth Porter maintained a Buy rating with a $385 price target.

Autodesk Inc. (NASDAQ: ADSK) reported robust second-quarter (Q2) fiscal 2026 results, with revenue accelerating to $1.76 billion, a 17% increase year-over-year (YoY). Billings surged 36% to $1.68 billion, and cash flow from operating activities more than doubled to $460 million. The company's stock edged up 0.79% in after-hours trading to $288.20 [1].

Key highlights from the Q2 results include:
- Revenue Growth: The company reported a 17% YoY increase in revenue, reaching $1.76 billion.
- Billings: Billings grew by 36% to $1.68 billion, indicating strong customer adoption of Autodesk's services.
- Operating Margin: GAAP operating margin improved by 2 percentage points to 25%, and non-GAAP operating margin rose by 1 percentage point to 39%.
- Cash Flow: Cash flow from operating activities surged 117% to $460 million, and free cash flow rose 122% to $451 million.
- Earnings per Share (EPS): GAAP EPS increased by $0.16 to $1.46, while non-GAAP EPS climbed $0.47 to $2.62.

Autodesk's growth was broad-based across product categories and geographic regions. The company's core Design business generated $1.47 billion in revenue, up 17%, while the Make segment grew 20% to $194 million. The Americas led with 19% growth to $786 million, followed by EMEA (Europe, Middle East, and Africa) at 18% growth to $675 million, and Asia-Pacific at 11% growth to $302 million [1].

For the third quarter of fiscal 2026, Autodesk expects revenue between $1.80 billion and $1.81 billion, with non-GAAP EPS ranging from $2.48 to $2.51. For the full fiscal year 2026, the company projects revenue of $7.03-$7.08 billion, representing approximately 15% growth [1].

UBS has raised its price target for Autodesk to $385, while maintaining a "buy" rating, reflecting optimism about the company's financial prospects and potential for free cash flow growth [2]. Morgan Stanley analyst Elizabeth Porter also maintained a Buy rating with a $385 price target [3].

Autodesk's shares are trading at a discount compared to peers, presenting a favorable risk/reward scenario for investors. The company's strong Q2 results and solid outlook suggest continued momentum as it executes on its strategic initiatives and navigates the transition to its new transaction model.

References:
[1] https://za.investing.com/news/company-news/autodesk-q2-fy26-slides-revenue-growth-accelerates-to-17-billings-surge-36-93CH-3859721
[2] https://www.ainvest.com/news/autodesk-ubs-raises-pt-385-maintains-buy-rating-2508/
[3] https://www.ainvest.com/news/autodesk-raises-fy26-revenue-guidance-7-075b-targets-41-operating-margin-cloud-ai-strategies-2508/