Computer-aided design software specialist Autodesk (NASDAQ:ADSK) posted big returns in a good month for the broader market as the stock gained 15% in January compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally has added to significant gains for Autodesk investors, with the stock up 35% in the past year and higher by over 200% since early 2016.
Autodesk announced late in the month that it had completed an almost $300 million acquisition that management sees as helping bulk up its construction project offerings. That bolt-on purchase might marginally improve its earnings profile, but the bigger driver behind last month's stock price slump was structural. Specifically, Autodesk was pulled lower in December along with the broader market, and so when indexes rallied, as they did in January, the stock was primed to benefit from the rebound to an unusually large degree.
The company has an opportunity to take charge of its growth narrative with fiscal fourth-quarter results set to publish on Feb. 28. For that report, CEO Andrew Anagnost and his team predict that booming demand for its cloud-based subscription services should continue to lift sales, with revenue likely to land at just over $700 million for a 27% spike over last year. Whether Autodesk's rally extends deeper into 2019 will depend on whether those accelerating gains, in terms of both sales and profitability, continue over the coming quarters.