Why Shares of Autodesk Soared in October

Shares in engineering design software company Autodesk (NASDAQ: ADSK) rose 11.4% in October, according to data from S&P Global Market Intelligence. The move comes after a change in sentiment over the stock after an investor relations presentation on Oct. 7. In a nutshell, management's outlining of its strategic planning for its construction, and design and manufacturing end markets won over investors who may have been skeptical.

There is little debate over whether Autodesk is a long-term growth stock. Instead, the bull and bear battle has long centered on its near-term guidance, precisely management's target for free cash flow (FCF) of $2.4 billion in its fiscal 2023. For reference, Autodesk's fiscal year ends on Jan. 31, so it is currently in the fourth quarter of its fiscal 2022.

The market may doubt the target because the guidance for full-year FCF in 2022 is $1.5 billion to $1.575 billion, implying growth of $825 million to $900 million in 2023 alone. Moreover, Autodesk will have to generate an FCF margin of above 45% in 2023 based on analyst revenue forecasts for $5.2 billion in revenue in 2023 to get there.

Source Fool.com