On Thursday, Rosenblatt Securities adjusted the stock price target for Altair Engineering (NASDAQ:ALTR) to $113.00, up from the previous $88.00, while maintaining a Neutral rating on the stock.
This revision follows Altair's recent announcement of a definitive agreement to be acquired by Siemens in an all-cash transaction. Under the terms of the acquisition, Altair shareholders will receive $113 per share, representing a 19% premium over Altair's closing price on October 21, 2024.
The deal, valued at approximately $10.6 billion, is anticipated to conclude in the second half of fiscal year 2025. The acquisition price corresponds to 15.6 times and 14.3 times enterprise value to sales (EV/S) based on Rosenblatt's revenue estimates for fiscal years 2024 and 2025, respectively.
Altair also reported its third-quarter results, which exceeded Rosenblatt's revenue expectations by roughly 2.7%. The company experienced a year-over-year increase of 16.2% in software product revenue (in constant currency), alongside improved gross and EBITDA margins, the latter being recorded at 16.9%.
Following the acquisition news, Altair's management has canceled its third-quarter investor conference call and refrained from updating its previous guidance. In response to these developments, Rosenblatt has made slight adjustments to its fiscal year 2024 and 2025 forecasts for Altair and has raised the target price to match Siemens' offer. Despite the acquisition, Rosenblatt's stance on Altair's stock remains Neutral.
In other recent news, Altair Engineering Inc. has noted significant developments. The company is set to be acquired by Siemens for $10.6 billion, as per a definitive agreement, which is expected to be finalized in the latter half of 2025, according to RBC Capital. This acquisition aligns with RBC Capital's revised price target for Altair, which was increased to $113.00 from $90.00.
However, William Blair downgraded Altair's stock from Outperform to Market Perform following the announcement of the acquisition. This decision reflects the belief that a substantially higher bid for Altair is unlikely. In addition, Oppenheimer maintained a positive stance on Altair, reiterating an Outperform rating and a $100.00 price target.
Altair's Q2 2024 earnings showed a substantial increase, with total revenue reaching $148.8 million and software revenue hitting $135.4 million. This growth was primarily driven by a strong performance in the aerospace and defense sector and the release of enhanced AI capabilities in Altair HyperWorks 2024.
Altair, in collaboration with the Technical University of Munich, made a significant breakthrough in quantum computing, particularly in computational fluid dynamics. This development could notably increase the model size and scalability of simulations compared to classical computing methods.
Lastly, Altair expressed gratitude for the ongoing support from Matrix Capital Management, which decided to maintain its full investment position in the company.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Altair Engineering's (NASDAQ:ALTR) acquisition by Siemens and its financial performance. The company's market capitalization stands at $9.22 billion, aligning closely with the $10.6 billion acquisition value announced by Siemens. Altair's revenue for the last twelve months as of Q2 2024 was $627.21 million, with a notable revenue growth of 6.85% over the same period.
An InvestingPro Tip highlights that Altair's stock price has outperformed the S&P 500 in the past year, which is evident from the impressive 74.87% price total return over the last 12 months. This strong performance likely contributed to Siemens' interest in the acquisition.
Another relevant InvestingPro Tip notes that Altair maintains a high gross profit margin, recorded at 80.92% for the last twelve months as of Q2 2024. This robust margin underscores the company's operational efficiency and supports the premium valuation in the acquisition deal.
For investors seeking deeper insights, InvestingPro offers 14 additional tips for Altair Engineering, providing a comprehensive analysis of the company's financial health and market position.
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