Autodesk Drops Plan to Buy PTC. The Stock Is Climbing.

Autodesk doesn’t appear to be considering an acquisition the size of software rival PTC, Rosenblatt Securities analyst Blair Abernethy said. (Courtesy Autodesk)

Shares of Autodesk and PTC moved in opposite directions Monday after Autodesk appeared to rule out a potential acquisition of the rival software company.

In a Form 8-K filed with the U.S. Securities and Exchange Commission, Autodesk said it was focused on attaining organic growth through “targeted and tuck-in acquisitions.” The filing itself makes no mention of PTC.

“We interpret this 8K as a reiteration and continuation of Autodesk’s long held strategy of organic product development and revenue growth supplemented by tuck-in acquisitions targeting specialized product areas and, therefore, rules out a strategic acquisition the size of PTC at this time,” Rosenblatt Securities analyst Blair Abernethy wrote. He noted that PTC’s market cap hovered at around $23 billion as of Friday.

Shares of Autodesk climbed 5.7% to $296.28, while PTC stock declined 1.8% to $190.04.

PTC didn’t immediately respond to a request for comment from Barron’s. An Autodesk spokesperson directed Barron’s to the SEC filing, saying it contained the company’s “full statement” on the matter.

Shares of both companies wavered last week after Bloomberg reported that Autodesk was exploring an acquisition of PTC, citing people familiar with the matter. The outlet has since reported that Autodesk is no longer weighing a deal.

Such a transaction would have consolidated market share within the engineering-software space. While their niches differ slightly, with Autodesk boasting a larger portfolio of design tools, both companies offer computer-aided design software.

In the 8-K filing, Autodesk said it was taking other steps to “drive long-term shareholder value” and execute its “established strategic priorities in cloud, platform, and AI.”

Abernethy reiterated a Buy rating and $345 price target on the stock ahead of Autodesk’s next earnings report, which is expected in late August.

RBC Capital Markets analyst Matthew Hedberg maintained an Outperform rating and $345 target price as he similarly expressed skepticism that Autodesk had remaining interest in a deal with PTC.

“While not directly addressing PTC, we believe the 8K essentially shuts down the idea at this point,” Hedberg wrote. He noted that earlier conversations with shareholders exposed negative sentiment around such a “large transformational deal,” with concerns about financing and potential roadblocks during the approval process.

“While it appears that Autodesk isn’t interested in PTC at this point, the question remains on whether PTC is for sale,” Hedberg continued. In his view, a sale is unnecessary as PTC heads down a path of “durable growth and continued margin expansion” and aims to close the valuation gap with peers.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com