Autodesk rises as Morgan Stanley names co 'top pick' on EPS upside
** Autodesk's ADSK.O shares up 0.7% to $273.90 on Mon as Morgan Stanley says its analysis on co's margin opportunity increases conviction in EPS upside, names firm 'Top Pick'
** ADSK shares trading at multi-turn discount to both design software and scaled software peers while fundamentals passing the trough on FCF (free cash flow), rev growth, operating margin and investor sentiment, Morgan Stanley analyst Elizabeth Porter wrote in note
** Porter sees ADSK expanding GAAP operating margin from 21-22% in FY25 to ~29% in FY28, suggesting ~8% upside to Street's FY26-28 earnings estimates
** "Robust catalyst path" includes lower interest rate environment helping demand medium-term, expected permanent CFO announcement and recent activist involvement aiding execution and management oversight, Porter said
** She reiterates 'overweight' and sticks with $320 PT, ~18% above stock's Fri close
** A month ago, ADSK raised its annual rev and profit forecasts, pointing to launch of its new transaction model in North America
** Co faces pressure from activist investor Starboard Value, which has been pushing for changes
** 17 of 27 analysts rate ADSK "strong buy" or "buy", rest "hold" and median PT is $299, per LSEG
** With move on Mon, stock up ~12.5% YTD vs S&P 500 Tech sector's .SPLRCT ~29% advance and Nasdaq's .IXIC ~21% rise
(Lance Tupper is a Reuters market analyst. The views expressed are his own)
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