Altair Engineering’s Price Target From RBC Boosted to $31 From $29

Altair Engineering (ALTR) received an increase Thursday to its price target from RBC Capital Markets after the simulation-technology company released Q4 results above analysts’ expectations late Wednesday and issued upbeat revenue guidance for Q1 and 2018 although its earnings outlook missed Street views.

The new price target from RBC is $31 per share, up from $29. The boost brings the shares to slightly below the stock’s Wednesday closing price of $31.46. The shares rose 3.3% in Wednesday’s after-hours session to $32.50. RBC kept its investment rating on the stock at sector perform.

In a note to clients, RBC described the Q4 report as showing “a strong finish to 2017 was highlighted by 27% software billings growth as the company is showing strong execution.”

However, the firm said while “an improving mix of software revenue is a positive for long-term gross margins and profitability,” incremental investments “to drive additional software growth and take advantage of underlying demand represent a slight near-term headwind to profitability.”

Still, RBC said it remains “bullish on fundamentals and the company’s ability to execute against an attractive macro environment.”

Altair posted adjusted earnings per share of $0.18, up from $0.12 a year earlier and handily surpassing analysts’ mean estimate according to Capital IQ of $0.06. Revenue totaled $89.9 million, up from $82.8 million a year earlier and topping analysts’ mean estimate of $87.6 million.

For Q1, the company forecast revenue of $86.5 million to $87.5 million and adjusted earnings of $1.8 million to $2.3 million, compared with analysts’ mean estimates heading into the guidance of $86.5 million and $4.5 million. For 2018, Altair sees revenue of $362 million to $366 million and adjusted earnings of $18 million to $20 million, versus analysts’ mean estimates of $359.2 million and $25.3 million, respectively.

Leave a Comment