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What’s up with the Altium share price?

‘In response to media speculation today, Altium Limited advises that it has not received any further offer from Autodesk.’

In June, Altium (ASX: ALU) was faced with an optimistic dilemma: the Nasdaq listed Autodesk was proposing to buy the company, for $38.50 per share. That was a steep premium to where the stock traded at, at the time, and the stock, unsurprisingly surged in response.

Altium’s management however swiftly shot down that offer – at that price – saying it significantly undervalued the business. 'Altium has a unique position in the electronics ecosystem and in the past unsolicited acquisition interest has developed from partnership dialogues with others in the ecosystem,’ management said.

Then a bit later in June, Altium released a trading update to the market. Issuing a downgrade in the process, saying it expected full-year revenue and margins to now come in at the low-end of the previous guidance range. Specifically new guidance was as follows:

  • FY21 revenue of between US$190 million to US$195 million
  • FY21 margins of between 37% to 39%

Despite tempering expectations, Altium’s Chief Financial Officer remained upbeat, saying:

'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.'

Confidence in the software company is likely at an all-time low, with Altium now having issued 7 downgrades in just 18 months. As analysts from RBC put it: the company ‘still has some work to do to rebuild market confidence in the growth outlook.’

Despite that, RBC remains confident in the mid-term outlook for Altium, rating the stock Sector Perform while assigning it a $37.00 price target.

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The latest twist in the Autodesk offer

Mind you, the whole saga got a lot more interesting last week (and today), after reports emerged from the Australian Financial Review that Autodesk upped its takeover offer to $40.00 per share and that Altium had rejected that upped offer.

Those reports triggered a crash, with Altium falling ~10% on Monday, in response. Altium rushed its shares into a trading halt at 10:17 AM, then told the market at 11:14 AM that claims of a $40.00 per share takeover bid were categorically false. The company told the market:

'In response to media speculation today, Altium Limited advises that it has not received any further offer from Autodesk. All details relating to the Autodesk offer have been disclosed by the Company in its ASX announcement releases to the market on 7 June 2021.'

Like clockwork, the stock rose off the intraday low it recorded at 10:10 AM, trading as much as 13% off that bottom during the session.

Looking ahead, Altium is set to report its full-year results on 23 August.

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