Altium Shares Rebounds Alongside Strength in US Tech

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Altium Shares Rebounds Alongside Strength in US Tech

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  • Altium Shares have surged over 10 per cent in the previous five days
  • The software and solutions provided by Altium remain in high demand
  • Citi has recently placed a $33.50 price target with a 23.9 per cent upside.

Altium Limited (ASX: ALU) has experienced significant strength in recent days as the tech-heavy NASDAQ Composite rebounds from an 8 per cent pullback from its all-time highs. The Intrinsic value behind Altium product offering provides its significant strength despite broader Macroeconomic movements as it provides the framework and software behind the creation of printed circuit boards. This means that their contact with innovation and development of tailored solutions is less tied to direct consumer demand but instead the broader market for software design.

The increasing Technology focused nature of our current international economy, year on year, increases its emphasis on improved efficiency and effectiveness of everyday equipment. The enterprise printed circuit boards provided by Altium and used by engineers are found in various commercial electronic workings. The company works closely with some of the worlds most prominent tech companies, including Apple, Microsoft and Tesla.

The Nasdaq composite record run in 2021 has slowed this calendar year significantly following concerns over rising Treasury yields and the position of increases in inflation. Despite this, the outlook for the index’s major tech players remains positive, with a strong 5 per cent rebound in recent days assisting Altium.

In recent months Altium shares price has come under significant pressure, currently trading 36 per cent below all-time highs. A collection of less than extraordinary earnings reports, combined with a broader weakness in tech, has contributed to this softness. More recently, however, the share price has surged over 10 per cent over the past 5 trading days after using a significant level of a historical support before bouncing higher using very green bullish candlesticks. Further, the price action has crossed the mid-Donchian with momentum from a positive stochastic oscillator and MACD.

Citi recently placed a Buy rating on the circuit board developer with a price target of $33.50 per share, representing 23.89 per cent upside from current levels. They have directly cited that the company have reached the end of a COVID-19 induced downgrade cycle. Citi also believes demand for Altium’s main products, Octopart and Altium 365, are experiencing positive adoption trends.

Other major investment institutions retain positive ratings on Altium, with Macquarie, UBS, Credit Suisse and Morgan Stanley placing Neutral, Buy, Outperforms and Overweight ratings, respectively. These rating all represent price targets 11.25.7, 29.44 and 36.83 per cent higher than the current trading price, respectively. Altium will next be providing earnings results on the 24th of August for the full 2021 financial year.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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