Merrill Upgrades Autodesk to 'Buy'

Analyst Jay Vleeschhouwer sees signs of earnings and revenue improvement from the maker of design-automation software

Merrill Lynch upgraded Autodesk (ADSK ) to buy from neutral.

Analyst Jay Vleeschhouwer says Autodesk delivered better-than-expected results. He raised the $239 million fourth-quarter fiscal 2004 (Jan.) revenue estimate to $249 million, upped the 24 cents earnings per share estimate to 29 cents; he raised the $921 million fiscal 2005 revenue estimate to $947 million, and upped the 55 cents earnings per share estimate to 67 cents.

Vleeschhouwer says he'd been looking for several indications of improvement -- including recovery in new units, continued increases in subscriptions revenue, and a serious commitment to increasing operating margins; he believes these improvements are sufficiently taking place. While shares have appreciated recently, Vleeschhouwer thinks there's further potential based on the new outlook for the fourth quarter and fiscal 2005. He set a $26 target.

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