On Thursday, RBC Capital adjusted its price target for Altair Engineering (NASDAQ:ALTR), increasing it to $113.00 from the previous target of $90.00. The firm has sustained its Sector Perform rating on the stock. This revision comes in the wake of Altair's recent announcement that it has entered into a definitive agreement to be acquired by Siemens for $10.6 billion, which translates to $113 per share in cash.
The acquisition price represents a 19% premium over Altair's stock price as of October 21, 2024, and a 13% premium to the company's highest stock price when not being influenced by acquisition speculation. The deal between Altair and Siemens is expected to be finalized in the second half of 2025.
RBC Capital's updated price target aligns with the acquisition price offered by Siemens. The acquisition is a significant move for Altair, as it provides a considerable return to shareholders based on the premium over the recent and all-time high stock prices.
The acquisition is poised to have a substantial impact on Altair's future, with Siemens' offer reflecting confidence in the value and potential of Altair's business. The transaction is subject to customary closing conditions and regulatory approvals, with an anticipated completion date in the latter half of 2025.
Investors and market watchers will be keeping a close eye on the progress of this acquisition, as it represents a notable consolidation within the industry. Altair's agreement with Siemens marks a pivotal chapter in the company's trajectory, promising to reshape its operations and market standing once the deal concludes.
In other recent news, Altair Engineering Inc. has experienced significant developments.
The company's Q2 2024 earnings showed a substantial increase with total revenue reaching $148.8 million and software revenue hitting $135.4 million, marking a 10.6% year-over-year increase. 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.
Furthermore, Altair's stock was downgraded from Outperform to Market Perform by William Blair following the announcement of its acquisition by Siemens.
In addition, Altair, in collaboration with the Technical University of Munich, achieved a 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.
Altair also expressed gratitude for the ongoing support from Matrix Capital Management, which decided to maintain its full investment position in the company. Analysts from Gartner (NYSE:IT) recognized Altair's leadership in data science and machine learning, reinforcing the company's position in the computational intelligence landscape.
These recent developments indicate a dynamic period for Altair Engineering Inc., with significant changes in its financial performance, stock analysis, and technological advancements.
InvestingPro Insights
The recent acquisition news has significantly impacted Altair Engineering's market performance. According to InvestingPro data, Altair's stock has shown impressive returns, with a 74.87% price total return over the past year and a 35.03% return in the last six months. These figures align with the premium offered by Siemens in the acquisition deal.
Altair's financial metrics provide context to the acquisition valuation. The company's revenue for the last twelve months as of Q2 2024 stands at $627.21 million, with a robust gross profit margin of 80.92%. This high margin likely contributed to Siemens' interest in the company.
InvestingPro Tips highlight that Altair's stock price is near its 52-week high, currently at 96.03% of that peak. This tip correlates with the acquisition news and the premium offered by Siemens. Another relevant InvestingPro Tip notes that analysts have recently revised their earnings estimates upwards for Altair, which may have influenced the acquisition valuation.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for Altair Engineering, providing a deeper understanding of the company's position and potential.
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