Altium (ASX:ALU) share price may benefit after rejecting bid: Fund manager

This investment fund still likes the look of Altium, even after rejecting a bid from Autodesk…

| More on:
Young girl wearing glasses flexes her left bicep confidently.

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 has underperformed the S&P/ASX 200 Index (ASX: XJO) this year. However, there are still experts who believe the printed circuit board software company offers an enticing proposition.

At the close of trade today, the Altium share price finished down 1.93% to $33. Unfortunately, investors are in the red year to date by 2.91%.

Expert bullish on Altium share price

While some investors might worry about the lack of performance from Altium recently, portfolio managers at investment fund Smallco don't share the same concerns.

According to the fund's June quarterly update, Altium remains one of Smallco's largest and longest-held positions in the Smallco Broadcap Fund. However, the exact weighting is not disclosed.

Furthermore, Smallco referred to the inevitably rejected takeover bid from Autodesk, Inc. (NASDAQ: ADSK) for Altium. The non-binding offer made in June was for $38.50 per share. This represented a 41% premium to the previous trading price.

Altium has been pursuing a strategy of industry transformation through dominance. With the largest pool of PCB design users, a rapidly growing cloud product and the industry leading search engine for electronic parts, Altium is uniquely placed within the industry to execute on its vision to create a platform that connects the electronics and product design worlds to the electronics supply chain and manufacturing partners.

Based on the above statement from Smallco, it seems the fund also considered the offer to undervalue Altium's growth prospects. These prospects and the Altium share price will be in the spotlight come 23 August 2021, with the company set to report its FY21 result.

Brokers take on the company

Analysts at Bell Potter also took another look at Altium after Autodesk walked away. According to the note, the broker retained its hold rating but decreased its price target to $35.

The reasoning is based on how quickly Autodesk lost interest in acquiring Altium. Additionally, the broker didn't rule out further takeover interest. However, the incident with Autodesk leads the brokers to think valuation is an obstacle.  

Based on the current Altium share price, the PCB software provider has a market capitalisation of $4.37 billion.

Motley Fool contributor Mitchell Lawler 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 and Autodesk. The Motley Fool Australia owns shares of and has recommended Altium. The Motley Fool Australia has recommended Autodesk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Five happy friends on their phones.
Share Market News

Goldman Sachs says these ASX tech stocks can rise 18% to 30%

The broker sees big returns on offer from these shares.

Read more »

A guy helps a girl lift a couch, both are laughing.
Technology Shares

3 of the best ASX tech shares to buy and hold until 2030

I think these stocks have exciting futures.

Read more »

A young woman uses a laptop and calculator while working from home.
Technology Shares

If I'd put $5,000 in Block shares 5 months ago, here's what I'd have now

Was it a good idea to invest in this payments stock five months ago?

Read more »

Close up of a sad young woman reading about declining share price on her phone.
Technology Shares

Why is the Brainchip share price sinking over 7% today?

What's going on with this tech stock on Wednesday?

Read more »

woman working on tablet
Technology Shares

Missed out on Nvidia? My best ASX tech stock to buy and hold

Do you have FOMO after the US chip maker's share price rocketed? Here's an Aussie company worth backing instead.

Read more »

Three businesspeople leap high with the CBD in the background.
Technology Shares

Guess which ASX small-cap stock is rocketing 45% on 'pivotal moment'

Investors have responded very positively to an announcement.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »