Here's why Altium Limited shares are up 30% in the last month

Up until today Altium Limited (ASX:ALU) shares have been going gangbusters. Here's why…

| More on:
a woman

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

Despite the fact that Altium Limited (ASX: ALU) shares aren't having the best of days today, they are still up by around 30% in the last 30 days.

These gains were largely down to the release of a strong full year result at the end of August from the printed circuit board software provider.

For FY 2016 the company reported a 16.7% jump in revenue to US$93.6 million. Earnings before interest, tax, depreciation, and amortisation rose 20.9% to US$27.4 million and normalised earnings per share grew an impressive 43.5% to 17.9 US cents (approximately 23.5 Australian cents).

I was very impressed with the result, but even more impressed with management's growth plans. Altium's management has now turned its attention to achieving market leadership and more than doubling its revenue to US$200 million by 2020.

Next year Altium should get a top line boost from its partnership with France-based software giant Dassault Systemes. The leading mechanical computer aided design company included Altium's software in the latest version of its popular SolidWorks product.

Furthermore, several acquisitions made in the last financial year are expected to make a notable impact on its results in FY 2017. None more so than the $7.9 million acquisition of Perception Software Inc, which is expected to be accretive to earnings next year.

So with such bright prospects why are its shares trading 6% lower today? Today's decline is a result of a downgrade by global investment bank UBS. According to a research note reported by the Fairfax press its analysts downgraded Altium from a buy to a sell, UBS maintained its price target of $9.05.

The downgrade was made on valuation grounds, with its analysts believing its share price has been getting ahead of itself.

Whilst it could yet drop lower, I believe this sell off has brought Altium's shares down to a good entry price for investors. Much like fellow beaten-down tech shares Aconex Ltd (ASX: ACX) and Touchcorp Ltd (ASX: TCH), I would class Altium as a buy and expect it to prove itself to be a great investment in the long-term.

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

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »