Despite a lacklustre start to the year, the share price of ASX software developer Altium Limited (ASX:ALU) has rallied strongly more recently. Over the last six months, shares in the company have risen over 20% (to $35.19, as at the time of writing).
The rise in the Altium share price has come on the back of mixed news out of the company. A lofty takeover bid from a US multinational turbocharged the Altium share price back in June. But Altium has also flagged that full-year revenues could fall short of expectations.
Let's take a closer look at these recent developments and try to work out what it all might mean for the Altium share price.
What's going on?
The Altium share price really took off on 7 June, after it revealed that it had received a takeover bid from US software company Autodesk, Inc. (NASDAQ: ADSK). Under the proposal, Autodesk would have acquired 100% of the shares in Altium for a price of $38.50 a share. On the day of the announcement, the Altium share price was just $27.21.
Although Altium rejected the offer, foreign interest – especially from a US multinational with a market cap over US$70 billion – often makes local investors perk up and take notice. And the fact that Autodesk was willing to offer a premium of at least 40% over the prevailing share price sent the strong signal that Altium shares were being severely undervalued by the market.
The Altium share price jumped an astonishing 39% higher the day of the announcement, closing at $37.83.
Despite some simmering media speculation, Altium released a follow-up statement in mid-July, stating that it had received no further takeover bids from Autodesk.
Recent movements in the Altium share price
Since that massive June surge, the Altium share price has slid slightly lower. As at the time of writing, Altium shares are trading at $35.19, around 7% below their 7 June price, and roughly 12% short of the 52-week high of $40.21 they reached last October.
All eyes will be on the Altium share price when the company releases its full-year FY21 results on 23 August – although Altium has already tried to temper market expectations.
In a trading update released on 18 June, Altium flagged that it expected full-year revenues to come in at the low end of its previously issued guidance of between US$190 million to US$195 million, weighed down by a disappointing first-half result.
Commenting on the update, Altium CFO Martin Ive stated that "momentum has returned to Altium's business with double-digit growth in the second half, however, after a slow first half due to the impact of COVID and our pivot to the cloud, the full year is likely to be at, or slightly below, the low end of our guidance."
