Altium (ASX:ALU) share price in focus after broker upgrade

Altium's shares have been upgraded by a leading broker…

| More on:
A group of stockbrokers sit in a room with several computer screens in front of them as they discuss the Zip share price and Zip's merger with Sezzle

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

More on Broker Notes

A cute young girl with curly hair sips a glass of milk through a straw with a smile on her face.
Broker Notes

Up 37% this year, why Macquarie expects A2 Milk shares to keep outperforming

Macquarie remains bullish on A2 Milk shares heading into 2026. Let’s see why.

Read more »

ASX shares Business man marking buy on board and underlining it
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Broker Notes

Why Macquarie forecasts Northern Star shares are set to surge 55%

Macquarie believes Northern Star shares are well-placed to rocket higher.

Read more »

Two miners examine things they have taken out the ground.
Broker Notes

Up 64% this year! What's Macquarie's price target for Lynas Rare Earths shares?

Clouds on the horizon?

Read more »

a group of people in business attire gather around a computer in an office environment with expressions of concern as they try to nut out the answer to a challenge they are facing.
Broker Notes

Leading broker just downgraded the Fortescue share price. Is it time to sell?

Downside ahead for the iron ore titan?

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Broker Notes

Broker tips Domino's Pizza share price to rise 54% in FY26

Ord Minnett says the current Domino's Pizza share price offers "very attractive value".

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »