Why did Autodesk stock drop today? 'Subdued' Q3, weak forecast leads to downgrade
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Autodesk (NASDAQ:ADSK) shares fell nearly 5.7% to close at $197.04 as the software company reported a "subdued" third-quarter and guidance, according to Mizuho Securities, leading to the investment firm downgrading it going into what is expected to be a "challenging" year.
Analyst Matthew Broome cut his rating on Autodesk (ADSK) to neutral from buy, while also lowering the price target to $210, pointing out that continued macro uncertainty has "impacted" contracts, even those with multi-year up front terms as customers look to conserve cash. 
"As such, full-year billings and [free cash flow] guidance was again lowered (and may still be a stretch), and [management's] discussion of next year's modeling outlook was downbeat, in our view," Broome wrote in a note to clients.
Broome added that he is confident in Autodesk's (ADSK) market position, particularly in building design, calling it "strong," but added that it's likely the company faces several near-term issues. 
"Given an increasingly uncertain operating environment, we find it difficult to continue recommending the name going into a more challenging [fiscal 2024], and believe that a modest valuation discount to the broader enterprise software group is therefore justified," Broome explained.
For the third-quarter, Autodesk (ADSK) said it earned $1.70 per share, excluding one-time items, in-line with estimates. Revenue rose 13.3% year-over-year to $1.28B, also in-line with estimates.
Billings for the period were slightly weaker-than-expected at $1.36B, while cash flow from operating activities was $469M.
Looking ahead, Autodesk (ADSK) said it expects fourth-quarter revenue to be between $1.303B and $1.318B, compared to the $1.33B that analysts expect. Adjusted earnings are forecast to be between $1.77 and $1.83 per share, with the mid-point below the $1.83 analysts were expecting.
Fiscal 2023 is expected see a bit of a downturn, with billings expected to be between $5.57B and $5.67B and revenue between $4.99B and $5.005B, up approximately 14% year-over-year. 
Adjusted earnings are forecast to be between $6.56 and $6.62 per share, with the mid-point below the $6.62 per share analysts were expecting.

Late last month, Morgan Stanley said that software stocks, including Autodesk (ADSK), had underperformed but that significant risk was "priced in."