Autodesk, Inc. (ADSK) shares fell more than 15% on Wednesday after the company reported worse-than-expected third quarter financial results. Revenue rose 5.2% to $151.3 million – beating consensus estimates by $1.83 million – and net losses of 12 cents per share beat consensus estimates by one cent per share. However, guidance for the fourth quarter and the full year came in somewhat lower than expected, and the company is anticipating restructuring charges.

The software company announced plans to prioritize its subscription transition, which will involve the divestment of some of its businesses. As part of this process, Autodesk expects to take a pre-tax charge of $135 million to $149 million, including $91 million to $100 million of that figure in Q4, with the rest occurring next year. Wedbush analysts responded by downgrading the stock to Neutral with a price target of $126.00 per share. (See also: Autodesk: Can It Make Money?)

Technical chart showing the performance of Autodesk, Inc. (ADKS) stock

From a technical standpoint, the stock broke down from pivot point, trendline, and 50-day moving average support at around $120.00 to trendline support near $110.00. The relative strength index (RSI) fell sharply to oversold levels at 26.85, and the moving average convergence divergence (MACD) experienced a bearish crossover. Traders should maintain a neutral near-term outlook on the stock following the move.

Traders should watch for consolidation above trendline support levels at around $110.00 given the oversold RSI conditions before a possible move higher to S1 resistance at $115.42. If the stock breaks down from these support levels, traders should watch for a move to S2 support and the 200-day moving average at around $105.23 or a move even lower to prior lows and the psychologically important $100.00 price level. (For more, see: How Speculative Is Autodesk After Rising 53% YTD?)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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