Insights

Is the Altium (ASX:ALU) share price a buy?

Could the Altium share price be a buy?
The post Is the Altium (ASX:ALU) share price a buy? appeared first on The Motley Fool Australia. –

Might the Altium Limited (ASX: ALU) share price be a buy today?

The business has been quite volatile in recent weeks. Over the last month, Altium shares are down almost 6% to $35.56. But it went as low as $32.60 in the week after the market learned that Autodesk had walked away from the negotiating table.

Failed takeover

Two months ago, investors learned that Autodesk had approached Altium with a takeover bid of $38.50 per share.

But, Altium rejected that bid. The Altium board said it appreciated the interested expressed by Autodesk (which had evolved from a dialogue about a strategic partnership). However, Altium’s leadership believed the offer “significantly” undervalued Altium’s prospects.

Altium said that it has a unique position in the electronics ecosystem and in the past unsolicited acquisition interest has developed from partnership dialogues with others in the ecosystem.

The company said that its strong track record of setting ambitious long-term goals and achieving them, gives the board confidence in its ability to pursue its transformation strategy for the electronics industry and to achieve its 2025 financial goals.

Altium believes it’s now well positioned to pursue market dominance and industry transformation. The adoption of Altium’s cloud platform is transforming Altium’s business model from maintenance-based subscription to capability-based software as a service (SaaS) subscription.

There was media talk that a somewhat higher bid from Autodesk was being talked about, but the US business has since walked away and Altium said that there hadn’t been another formal bid. The Altium share price fell 11% in the week after that announcement.

Trading update

In the middle of June, Altium said that it was expecting FY21 revenue to be at the low end of its guidance range of US$190 million to US$195 million. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin is also expected to be at the low end of its guidance range of 37% to 39% on an underlying basis.

However, Altium did say that momentum has returned to Altium’s business with double digit growth in the second half. However, the slow first half has impacted the overall FY21 result.

However, the company’s ‘renewal’ business is strong, Octopart is set for a record performance and China is delivering a “solid” performance.

Adoption of the Altium 365 cloud platform has increased and there are now more than 13,100 monthly active users and 6,300 monthly active accounts.

Is the Altium share price a buy?

The broker Credit Suisse certainly thinks so. It currently has a buy rating on the business with a price target of $42. That suggests a possible rise of almost 20% over the next 12 months if the broker is right. However, that was before Autodesk walked away.

Time will tell if Altium management are able to justify their confidence in knocking back Autodesk’s interest.

According to Credit Suisse, Altium shares are valued at 70x FY22’s estimated earnings right now.

The post Is the Altium (ASX:ALU) share price a buy? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Altium right now?

Before you consider Altium, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Altium wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

3 excellent ASX growth shares that could be buys

2 highly rated ASX 200 growth shares analysts love

Altium (ASX:ALU) share price may benefit after rejecting bid: Fund manager
Is the Altium (ASX:ALU) share price in the buy zone?
ASX 200 Weekly Wrap: Just like that… ASX back to record highs

Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!