Autodesk Pre-earnings Analysis
Chart done on daily timeframe. Autodesk is one of a few software companies that’s set to report earnings this week and investors are eager to see if they can followthrough as they did on their last earnings report. ADSK’s previous report pushed shares out of a multi-year base after the company’s net income grew more than 30%. The post-earnings rally moved shares to a new 52 week high, which means they need to report strongly again for buyers to justify their current valuation. The company is currently trading at a price to earnings ratio of 60x, which is about four times higher than the healthy average, so this earnings season the main focus will be on profitability and guidance. Last quarter’s EPS estimates were 1.28, which the company beat by .05, coming in at 1.33. This quarter’s EPS estimates are 1.30, which should be attainable, but investors will likely need to see a much higher number to buy up the stock further.
Autodesk’s technology was used in the recent Super Bowl, which may have given them credibility and brought more customers to them. This specific reason is why we expect them to easily achieve earnings and give upbeat guidance. It is reported that most of the Super Bowl commercials we saw this year were designed with the help of Autodesk software, making them a key player that could impress investors this quarter.
Option chain analysis:
Autodesk is set to report earnings on February 29th, one day ahead of the options expiring on March 1st. Those contracts are currently reflecting an implied volatility reading of 86%, which translates to about a $17 move. If the company beats expectations and provides strong guidance then we expect the multi-year base breakout to continue towards 286.00-288.00. If they miss then we’re expecting a move down towards their 225.00 support.