This broker just upgraded the Altium (ASX:ALU) share price to a buy

The Altium Limited (ASX:ALU) share price is trading lower today despite being upgraded by a leading broker this morning…

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The Altium Limited (ASX: ALU) share price is trading lower on Monday morning.

At the time of writing, the electronic design software platform provider’s shares are down 0.2% to $28.48.

This means the Altium share price is now trading 29% lower than its 52-week high of $40.21.

Is the Altium share price good value?

The recent weakness in the Altium share price is being seen as a buying opportunity by one leading broker.

According to a note out of Shaw & Partners, its analysts have upgraded its shares to a buy rating and lifted their price target on them to $34.00.

Based on the current Altium share price, this implies potential upside of 19% over the next 12 months.

What did Shaw & Partners say?

Shaw & Partners made the move due to Altium’s strong fundamentals and leverage to economic growth.

The broker believes the company is well-placed to benefit from increasing demand for electronic design software as economies recover from the pandemic.

Furthermore, its analysts have looked back to how Altium performed during and after the global financial crisis. Based on this, the broker suspects that its revenue will hit an inflection point in FY 2021.

In addition to this, Shaw & Partners believes its shares trade on attractive multiples in comparison to many of its software-as-a-service (SaaS) peers.

Is anyone else positive on Altium?

Shaw & Partners isn’t the only broker that sees value in the Altium share price. Last week analysts at Citi retained their buy rating and $33.50 price target on the company’s shares.

Although Citi suspects that Altium could fall short of expectations in FY 2021 due to discounting, it remains positive. This is due to its belief, much like Shaw & Partners, that Altium is coming to the end of its downgrade cycle.

Citi’s price target implies potential upside of just over 16% for its shares over the next 12 months.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of Altium. 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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