The Altium Limited (ASX: ALU) share price was out of form on Monday and dropped slightly lower following a major announcement.
The electronic design software platform provider’s shares fell almost 0.5% to $36.03.
This compares to a 0.25% gain by the S&P/ASX 200 Index (ASX: XJO) and a 1.9% gain by the S&P/ASX All Technology Index (ASX: XTX).
What happened?
On Monday Altium announced an agreement to sell its TASKING business to European private equity firm FSN Capital for US$110 million.
The company revealed that it was selling the non-core asset so that it could focus on its new Altium 365 platform.
Altium’s Chairman, Sam Weiss, explained: “We are generating real momentum with Altium 365, the world’s first cloud platform for PCB design and realization, and we believe that Altium 365 is critical to enhance long term shareholder value. The divestment of TASKING enables us to singularly focus on our transformative vision and to fast track the building and acquisition of complementary assets.”
Altium expects the deal is to be finalised in the first quarter of 2021, subject to standard conditions and regulatory approval.
In addition to this, management revealed that its first half performance remains solid. And while ongoing COVID lockdowns in the US could impact its performance, it remains confident it will achieve its full year guidance for FY 2021.
Is this a buying opportunity?
One broker that believes this is a buying opportunity for investors is Morgan Stanley. This morning the broker retained its overweight rating and $40.00 price target on the company’s shares.
Based on the current Altium share price, this represents potential upside of 11% over the next 12 months.
It was happy to see the company reaffirm its guidance and was pleased with management’s positive commentary regarding its Altium 365 platform. It believes this platform will be the key driver of growth in the future.
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More reading
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- ASX 200 rises on Monday
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- These are 10 of the best performing ASX tech shares of 2020 so far
- Here’s why the Altium (ASX:ALU) share price is on watch today
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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