Here’s why the Altium Limited share price is skyrocketing today

Credit: Creativity103

The share price of Altium Limited (ASX: ALU) surged as much as 15.4% to a high of $5.69 this morning, although it is now trading 12.6% higher at $5.55. It’s a new all-time high for the share price and compares to a 0.5% decline in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

So What: Altium is a company that provides software which allows engineers to design Printed Circuit Boards, or PCBs, which are used in a myriad of products today including smartphones and computers, as well as fridges and even toasters.

In an update to the market today, the company said it had signed an Original Equipment Manufacturer (OEM) agreement with the European-based Dassault Systèmes.

The agreement will allow Dassault Systèmes to introduce a new SOLIDWORKS Electronic Computer-Aided Design (ECAD) product based on Altium’s PCB technology in order to bring new capabilities for SOLIDWORKS users, as well as the wider engineering community. Altium said it will deliver a “unique platform and an unprecedented level of productivity” in the design of intelligent products.

Indeed, Dassault Systèmes is a respected brand in the computer-aided design (CAD) space and its selection of Altium’s software is an encouraging update for shareholders. Altium’s CEO, Mr Aram Mirkazemi, said:

Dassault Systèmes’ selection of Altium’s PCB software technology is the most powerful endorsement of Altium’s bid for market leadership and is a clear indication that Altium is seen by industry leaders as the future of PCB design software.”

Now What: Unfortunately, it is difficult to determine exactly what the announcement means for shareholders of Altium. After all, the terms of the agreement were not disclosed, so it is not clear how much (or when) Altium will be paid. Still, it’s certainly encouraging to see that Altium’s software is being recognised around the world.

Altium’s shares have almost doubled in price over the last 12 months, but could have further to climb if it can continue to grow sales and earnings, as well as signing more agreements like the one just reached.

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Motley Fool contributor Ryan Newman owns shares of Altium. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below.

The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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