The Altium Limited (ASX: ALU) share price has continued its slide on Tuesday.
In afternoon trade, the electronic design software provider's shares are down over 3% to $31.35.
This means the Altium share price is now down approximately 10% since the release of its half year results.
Why is the Altium share price tumbling?
In case you missed it, on Monday Altium released its half year results. The company reported a 28% increase in half year revenue to US$102 million and a 38% lift in net profit after tax to US$23 million.
However, taking the shine off the result was management's guidance for the full year.
Although it now expects to hit the high end of its revenue guidance range, it only expects to achieve the low end of its margin guidance range. This implied a miss for its full year earnings based on consensus forecasts at the time.
Is this a buying opportunity?
The team at Bell Potter appear to believe the weakness in the Altium share price could be a buying opportunity.
According to a note, the broker has retained its buy rating, albeit with a slightly trimmed price target of $38.75.
Based on the current Altium share price, this implies potential upside of almost 24% for investors over the next 12 months.
What did the broker say?
The broker has made some revisions to its estimates, but remains positive on its future.
Bell Potter said: "Altium provided a soft upgrade of its FY22 revenue guidance from US$209-217m to US$213-217m. The company also, however, said the EBITDA margin would be at the low end of the 34-36% range and this was due to pursuing "new cloud and enterprise sales roles in an increasingly competitive talent market". Altium also reiterated its FY25/26 aspirational revenue target of US$500m and on the conference call CEO Aram Mirkazemi said this target was looking more achievable following the H1 result."
"We have downgraded our EPS forecasts by 4%, 2% and 1% in FY22, FY23 and FY24. The downgrades have been driven by decreases in our margin estimates while our revenue forecasts are close to unchanged. Note our revenue growth forecasts in FY23 and FY24 are in the high teens whereas to achieve the $500m target in FY25/26 the annual growth rate needs to be >20% (so we are being more conservative)," it concludes.
