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The Architecture Billings Index has historically been a sentiment indicator for software firm Autodesk (NASDAQ:ADSK). However, the index may be losing “relevance” as it relates to the stock as time goes on, Baird said.
Although the ABI had a “terrible, horrible, no good, very bad” month last month (down to a reading of 42 from 48), it’s become less relevant, as customer revenue and hiring both decline and subscription units and dollars face pressure, analyst Joe Vruwink said.
“This time around, normal relationships are diverging, with indicators of customer health holding up better than seen in prior tough ABI conditions,” Vruwink wrote in an investor note. Vruwink has an Outperform rating and $289 price target on Autodesk.
When the ABI has moved into the low 4o range, that has historically been an indicator that the health of the architecture space is “much weaker than currently observed” and coincided with services revenue of low to mid-single digits. However, the recent data has show modest increases in firms year-over-year revenues, along with increases in hiring, hours worked and nonresidential construction starts.
Autodesk shares fell 0.9% in afternoon trading on Monday.