By Liz Moyer

Autodesk (NASDAQ:) is headed for a mixed first quarter earnings report this week, according to Deutsche Bank, which cut its rating on the design software firm’s shares.

On Monday, the stock dropped 5%. Analyst Bhavin Sharma reduced his rating to Hold from Buy and dropped his price target to $225, from $275. Stock traded as high as $181.77 during the midday session.

The earnings report is scheduled for Thursday. Shah observed that current economic uncertainties have led to less willingness of customers to make upfront payments for multiyear contracts. Forecasts could be affected by this.

On the first quarter, “the majority of our partner conversations noted a slight miss vs. plan, with broader inflation/interest rate concerns to blame, though others did mention performance remains fine with limited to no macro related impact yet,” the note said. “Commentary around ‘design’ continues to highlight market saturation constraining the ability to grow new business and all partners noted customer willingness to pay multiple years upfront is diminishing.”

Shah indicated that his channel checks show fiscal 2023 might be lower than predicted due to this shifting demand. Deutsche Bank stated in a note that there are foreign currency challenges as well as sanctions against Russia over its war on Ukraine, which could affect approximately 2% revenue.

The note also said fiscal year 2024 consensus expectations suggest a slight downside to billings and a downside to free cash flow forecasts as the Street isn’t factoring in the demand shifts.