Shares of Autodesk were tumbling Monday after shares of the software manufacturer were downgraded by Deutsche Bank on expectations that management will trim revenue and billings estimates.
Analyst Bhavin Shah lowered his rating on the stock to Hold from Buy, and reduced his price target to $225 from $275. Autodesk (ticker: ADSK) was dropping 8.4% to $175.33 on Monday.
Shah's downgrade stems from the anticipation that management will guide down revenue, adjusted earnings, billings and free cash flow during the next couple of weeks.
For one, the sanctions on Russia could impact new sales and renewals in the region. While management previously said this was less than 2% of revenue, Shah thinks the impact on billings could be greater if the customers were expected to renew multi-year contracts.
Contract renewals outside of Russia could also be at risk as increasing economic uncertainty across the globe could contribute to a slowdown in upfront multi-year contracts, Shah added. If upfront billings grow less than management expects, it could impact overall billings and cash flow, especially in the second half of the year, he wrote.
"Commentary on upfront multi-year contracts skewed negative with larger renewal pool and a last chance to get any upfront discounting more than offset by broader hesitancy to sign up for 3 years into a tenuous economic backdrop," he wrote in a research note on Monday.
In addition, the company likely will see foreign exchange headwinds, as the strength of the dollar could take a bite out of the bottom line.
Most analysts remain bullish on Autodesk, with 16 out of the 22 analysts covering the stock rating it a Buy or Overweight. Five, including Shah, rated it a Hold, while one gave it a Sell rating.
Long-term, the company's construction cloud is seeing strong momentum that has carried forward from the last several quarters, which bodes well for Autodesk's growth prospects outside of major macroeconomic factors, Shah wrote.