The Altium Limited (ASX: ALU) share price could be on the move on Wednesday.
This follows the release of a broker note out of Bell Potter this morning.
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What did Bell Potter say about the Altium share price?
The good news for shareholders is that Bell Potter sees a lot of value in the Altium share price at the current level.
According to the note, the broker has upgraded the company's shares to a buy rating and lifted the price target on them from $32.50 to $42.50.
Based on the current Altium share price of $37.33, this implies potential upside of almost 14% for its shares over the next 12 months.
What did the broker say?
The note reveals that this upgrade was predicated largely on the belief that Altium could still be a takeover target of US software giant Autodesk.
Earlier this year, Autodesk tabled a $38.50 per share takeover offer and then reportedly followed that up with a $40.00 per share verbal offer. While this was a significant premium to the Altium share price at the time, the Altium Board wasn't interested and rejected both proposals.
Although this led to the end of takeover talks, Bell Potter suspects that Autodesk will return. This is due to its belief that Autodesk needs Altium's software to complete its platform.
The broker explained: "We have looked closely at Autodesk and what it is trying to achieve with its Fusion 360 platform and come to the conclusion that the ECAD functionality of the platform – provided by the recently integrated EAGLE – is probably not enough to deliver on the aim of the platform and effectively converge both the mechanical and electrical design processes."
"For this reason we believe Altium is still a takeover target for Autodesk as its PCB design software – Altium Designer (AD) – is high powered enough to provide the required functionality and so would be key in enabling Fusion 360 become the platform of choice for converged processes. Given the size of the prize is so large and is effectively a race with other industry heavyweights like Dassault Systèmes and Siemens we figure Autodesk will likely be back with a revised bid at some stage," it added.
Anything else?
In addition to this, the broker believes that trading conditions are favourable for Altium (and particularly its Octopart search engine). As a result, it suspects that there could be a "soft upgrade" to its FY 2022 guidance at its annual general meeting this month.
All in all, the broker believes the above makes the Altium share price good value right now for investors.
