Autodesk (ADSK) stock jumped more than 4% at the start of trading Monday after a report in The Wall Street Journal indicated activist investor Starboard Value has built an estimated $500 million stake in the global software firm.
Starboard's concerns are centered around Autodesk's operations, corporate governance and how the company handled a recent accounting probe, the WSJ said, citing people familiar with the matter. Starboard thinks Autodesk should improve its margins and make changes to its board of directors and it recently met with ADSK management to discuss these issues.
As part of its activist investing push, Starboard is also weighing legal action to reopen Autodesk's director-nomination window and to delay the company's annual shareholder meeting, which is currently scheduled for July 16, The Wall Street Journal report indicated.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We are confident in our strategic direction, significant margin opportunity, and our corporate governance," an Autodesk spokesperson said, according to the WSJ, adding that it welcomes constructive feedback from shareholders.
Autodesk stock has a market cap of about $51 billion at the time of this writing, so Starboard’s estimated $500 million stake would be roughly 1% of the company. While it's a large amount of money, it still does not make Starboard a top 10 stakeholder in Autodesk. Currently, The Vanguard Group and BlackRock are the largest stakeholders, owning roughly 9% and 8.5% of the company, respectively.
Is Autodesk stock a buy, sell or hold?
Even though the tech stock has drastically underperformed the broad market this year, down 2.6% for the year to date vs the S&P 500's nearly 14% gain, analysts are bullish.
According to S&P Global Market Intelligence, the average analyst target price for ADSK stock is $270.20, representing implied upside of more than 14% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Oppenheimer is one of the bullish outfits on ADSK stock with an Outperform rating (equivalent to a Buy) and a $275 price target.
"We expect Autodesk to deliver durable high-teens to low-20% earnings growth powered by double-digit revenue growth, and consistent margin expansion in the mid to long term," Oppenheimer analyst Ken Wong wrote in a June 12 note. "We also believe Autodesk is well positioned to capitalize on the digitization of the construction market, which remains a significantly large ($12 billion total addressable market) analog end-market."
Oppenheimer's $275 price target represents implied upside of over 16% to current levels.
Related Content
-
What's Next for Stocks After a Chaotic SpringA chaotic tariff policy buffets investors looking for clarity on the economy and inflation.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term CareMany people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Where to Invest in an Uncertain MarketIn an uncertain market, you can still pocket juicy payouts ranging from 4% to 14%, depending on risk.
-
My First $1 Million: Events Industry CEO, 65, Northern New JerseyEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Stock Market Today: Investors Look on the Bright SideA generally good week closes on another positive note, as investors, traders and speculators look for fresh catalysts.
-
My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
