On Friday, Rosenblatt adjusted its stance on Altair Engineering (NASDAQ:ALTR), changing the stock's rating from Buy to Neutral, despite increasing the price target to $88.00, up from the previous $74.00. The firm's decision comes after Altair disclosed its fourth-quarter earnings on Thursday, which revealed revenues slightly below expectations but with better-than-anticipated margins.
Altair's Q4 results showed a year-over-year software product revenue growth of 6.7% on a constant currency (CC) basis, which is a deceleration from the full year's 9.8% CC increase. The company's EBITDA margins reached 31%, surpassing the forecasted 29%. Despite a challenging enterprise software selling environment, Altair experienced consistent demand in its simulation, high-performance computing (HPC), and data analytics product segments. The company also noticed robust performance in the aerospace & defense, technology, and automotive sectors.
The company highlighted interest in its recent product releases and noted that many customers are starting digital twin projects using Altair's Twin Activate open integration solution. Looking ahead, Altair has set its Q1 revenue expectations between $167 million and $170 million, which falls short of the pre-quarter consensus of $181 million. This projection reflects a shift in the company's quarterly seasonality, moving away from the historically strong Q1.
While the forecast for the fiscal year 2024 revenue aligns with expectations, Rosenblatt has made slight adjustments to its FY24 and FY25 forecasts for Altair. The new price target reflects the updated outlook, yet the current market price of $89.86, following a recent surge in the stock, prompts a more cautious rating until a more favorable entry point emerges for Altair.
InvestingPro Insights
Following Rosenblatt's recent reevaluation of Altair Engineering (NASDAQ:ALTR), investors may find additional context in the company's financial metrics. Altair's adjusted market capitalization stands at $7.34 billion, reflecting its scale in the enterprise software market. While the company's P/E ratio, as of the last twelve months ending Q3 2023, appears deeply negative at -805.42, this metric alone may not fully capture the company's future growth potential or the value of its intangible assets.
Notably, Altair's revenue growth remains positive, with an 8.88% increase over the last twelve months as of Q3 2023, and a more pronounced quarterly revenue growth of 12.28% in Q3 2023, indicating a robust business expansion. Additionally, the company's gross profit margin stands at an impressive 78.98%, suggesting that Altair is maintaining strong control over its cost of goods sold and reinforcing the better-than-anticipated margins reported in its recent earnings.
Investors considering Altair's stock should be aware of the company's recent price performance, which includes a 58.85% one-year total return as of the 54th day of 2024, and a price that is currently at 96.71% of its 52-week high. These figures may suggest a strong market confidence in the company's trajectory. For those looking to delve deeper into Altair's financials, PRONEWS24 can be used to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription on InvestingPro, where 15 more InvestingPro Tips related to Altair are available, providing a more comprehensive analysis for informed investment decisions.
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