Autodesk ADSK recently acquired Salem, MA-based Assemble Systems. Although the details of the transaction were not disclosed, it’s likely to be a mixture of cash and stock. Notably, Autodesk was a leading investor in Assemble’s Series A funding in 2017.

Assemble’s software-as-a-service (SaaS) platform focuses on Building Information Modelling or BIM, in which Autodesk has keen interest. The platform provides 3D models, 2D drawings and other relevant construction related data.

Autodesk will integrate Assemble in its BIM project management platform named BIM 360. The deal not only strengthens the company’s product portfolio but also its customer base. Assemble boasts a strong clientele (174 unique customers) across 1,000 sites, working on 12,700 projects.

Moreover, the deal will help Autodesk become a significant provider of automation software in the preconstruction phase of a project. The rapid adoption of automation is expected to lead to better project management that bodes well for the overall construction industry. Autodesk is well positioned to benefit from this trend.

Autodesk, Inc. Price and Consensus

Autodesk, Inc. Price and Consensus | Autodesk, Inc. Quote


BIM 360 Adoption Increases Rapidly

The BIM 360 product has gained significant traction in recent times. The solution is rapidly replacing legacy document management tools as well as preconstruction planning software.

In fact, Autodesk expects BIM 360 to encompass the entire construction process from start to finish over the next five years.

The strong adoption is expected to boost top-line growth. In the last reported quarter, revenues increased 15.3% year over year to $559.4 million.

For the second quarter of fiscal 2019, Autodesk expects revenues in the range of $595-$605 million. The Zacks Consensus Estimate for revenues is currently pegged at $600.7 million, reflecting year-over-year growth of 19.7%.

However, net subscription addition will continue to get impacted due to consolidation of subscriptions, owing to upgrade to Collections and new packaging for BIM 360.

Nevertheless, Autodesk is benefiting from solid growth in product subscriptions and surging maintenance-to-subscription program. In fact, continuing investments in digital infrastructure like e-store and EBA programs are positive.

Zacks Rank & Other Stocks to Consider

Currently, Autodesk has a Zacks Rank #3 (Hold).

Adobe ADBE, Verint VRNT and Intuit INTU are stocks worth considering in the same sector. While Adobe and Verint sport Zacks Rank #1 (Strong Buy), Intuit has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long term earnings growth rate for Adobe, Verint and Intuit is currently pegged at 16.2%, 10% and 16.2%, respectively.

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