Shares in Altium Limited (ASX: ALU) are inching higher in early trade on Tuesday and are now changing hands at $3.28 apiece.
After a splendid year on the chart in 2021, the story has been different in the new year for Altium. The ASX tech basket has copped a hammering as growth stocks undergo a 3-month long correction amid shifting yield spreads and a more risk-off environment.
As such, Altium has faltered over 28% since trading recommenced on January 4 and is now sitting at 3-month lows after sliding a further 6% this past month.
One broker is still bullish on Altium however, retaining a long-term view for the company's outlook. Analysts at Jefferies reckon the growth story hinges on one key detail, and reckon there's plenty of juice left to squeeze in this case.
Key investments are key for Altium
Analysts at investment bank Jefferies reckon that Altium has a high probability of succeeding in the enterprise market, which could inflect positively on the share price.
Despite mixed results at the company's first half result, the broker was constructive on management's language around the need to invest in enterprise and cloud-sales capacity.
It thinks this is sound reasoning and offers an attractive growth story should the company successfully convert on its objectives.
In fact, Jefferies now thinks Altium could well hit its target of US$500 million in sales in FY26 now that the roadmap is clearer post-COVID. It also reckons the stock is fairly priced considering all of this.
The broker rates Altium a buy and values the company at $42.61 per share which implies an upside potential of 32% at the time of writing.
Meanwhile, analysts at rival investment bank Citi are a little more cautious, and also believe investment in the enterprise segment is integral to Altium's success.
However, Citi also believes this may be more difficult than first expected and may take longer than anticipated, as is often the case.
Not only that, but the firm believes earnings will take a slight hit as Altium ramps up its investment spend, thus eating into profit and investor earnings.
As such, it trimmed its FY22–24 EBITDA forecasts by approximately 3% to adjust for the increased investment spend and higher costs.
Altium share price snapshot
In the last 12 months, the Altium share price has soared. However, since headwinds in 2022, it has levelled off to a gain of 23% in that time, as shown below.
Things have been difficult this year and shares are down 28% this year to date. During the past month of trading, shares have collapsed another 6%.
