ALTR

Altair Engineering Inc

Industrial/Transportation


Presented:08/14/2018
Price:$39.66
Cap:$2.70B
Current Price:$94.22
Cap:$8.00B

Presented

Date08/14/2018
Price$39.66
Market Cap$2.70B
Ent Value$2.31B
P/E RatioN/A
Book Value$2.89
Div Yield0%
Shares O/S68.18M
Ave Daily Vol487,424
Short Int5.35%

Current

Price$94.22
Market Cap$8.00B
Altair Engineering, Inc. engages in the provision of software solutions for product design and development applications. It operates through the Software and Client Engineering Services segments. The Software segment includes a portfolio of software products; as well as solvers and optimization technology products, modelling and visualization tools. The Client Engineering Services segment engages in the provision of client engineering services to support customers with long-term, ongoing product design and development expertise. The company was founded by James R. Scapa in 1985 and is headquartered in Troy, MI.

Publicly traded companies mentioned herein: Altair Engineering Inc (ALTR), Amazon.com Inc (AMZN), Ansys Inc (ANSS), Dassault Systemes SE (DSY FP), Microsoft Corp (MSFT), PTC Inc (PTC)

Highlights

The presenter is long shares of Altair Engineering (ALTR), a simulation software developer, and sees a shift in the business model toward the much larger “solver” market as a meaningful opportunity. The use of a “patented” units-based licensing model, and the creation of a cheaper computer-aided engineering (CAE) product, should allow ALTR to go after enterprise accounts efficiently with a compelling offering. The company has historically priced its front- and back-end solutions at a discount to Ansys’ offering, and if the presenter’s model is accurate, ALTR could be a 15% top line grower with 50% EBITDA growth due to the leverage inherent in the model. At 7.5x - a 39% discount to Ansys’ EV/sales multiple - and using the streets 2020 sales estimates (~$490MM) in his base case, the target is $55 (~40% upside). In a more bullish scenario, the presenter targets $70 (80% upside); this requires a multiple in line with Ansys, an earlier margin inflection, and faster growth in the channel.

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Idea Discussion

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