Altium Limited (ASX: ALU) shares will be in focus next week when it releases its half year results.
Ahead of the release, let's take a look to see what the market is expecting from the electronic design software company.
What is the market expecting from Altium?
According to a recent note out of Bell Potter, its analysts are anticipating a solid half year update from Altium.
The broker is forecasting strong revenue and operating earnings growth on a like for like basis. In fact, it suspects the company could be tracking slightly ahead of its FY 2022 revenue guidance range based on its usual 45%/55% split between the first and second halves.
Bell Potter explained: "We are expecting a strong 1HFY22 result for Altium with forecast revenue and EBITDA growth of 24% and 29% respectively. (Note these forecasts are on a like-for-like basis and exclude TASKING which was sold in 2HFY21.)"
"Our 1HFY22 revenue forecast of US$99.4m is c.45% of our FY22 forecast of US$218.4m – which is slightly ahead of the US$209-217m guidance range – so we are assuming a relatively normal 45%/55% split in 1H/2HFY22 revenue for the company," it added.
As for earnings, the broker is being conservative and is forecasting an EBITDA margin of 35%, which leaves some upside risk.
It commented: "Our 1HFY22 EBITDA forecast of US$34.8m equates to an EBITDA margin of 35.0% which is below our FY22 forecast of 36.5% so there is some conservatism in our 1HFY22 margin forecast."
Are Altium shares in the buy zone?
Bell Potter sees value in Altium shares at the current level. The note reveals that the broker has a buy rating and $40.00 price target on them at present.
This suggests that there is 14% upside for investors over the next 12 months based on its current share price of $35.05.
