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Autodesk has agreed to buy Oregon-based Innovyze, a water infrastructure software company, in a cash deal worth $1 billion. Shares of the software company declined 2.5% to close at $290.25 on Feb. 23.
The purchase price is net of cash, subject to working capital and tax closing adjustments. Autodesk (ADSK) is looking to fund the acquisition through existing cash on hand.
The company said that for 35 years, innovative software has been created by Innovyze for the water industry, winning the trust of almost 3,000 customers globally.
Autodesk AEC Design Solutions EVP Amy Bunszel said, “Nearly nine trillion gallons of water are lost each year worldwide due to prolonged leaks and pipe breaks, but we cannot manage or fix what we cannot see.”
“Innovyze’s portfolio of operational analytics, distribution modeling, and asset management solutions provides the insight needed to identify this and other potential problems before they become a crisis,” Bunszel added.
Autodesk CEO Andrew Anagnost said, “An estimated $1.9 trillion is required to address global water infrastructure needs by 2030, and by fundamentally changing the way systems are designed, constructed, and operated, we are best positioned to overcome this challenge and realize the better world we’ve imagined.”
The deal is expected to close during the company’s first quarter of the fiscal year 2022, ending on April 30, 2021. (See Autodesk stock analysis on TipRanks)
On Feb. 17, Robert W. Baird analyst Joseph Vruwink increased the stock’s price target to $360 (24% upside potential) from $342 and maintained a Buy rating. The analyst “designated the shares as a Fresh Pick,” while he views “the company’s lagging performance as an opportunity to increase exposure.”
Further, Vruwink considers “the risk/reward profile as attractive with a bull case target of $500 for Autodesk shares.”
The consensus rating among analysts is a Strong Buy based on 13 Buys, 1 Hold and 1 Sell. The average analyst price target stands at $330.80 and implies upside potential of 14% to current levels. Shares have jumped almost 44% over the past year.
Additionally, Autodesk scores an 8 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.