Investors received a reminder of how important is to know when a company is yinging while the rest of the sector is yanging, when Morgan Stanley flagged mixed blessings for Altium (ASX: ALU) in the face of a chronic shortage on chips (aka semiconductors).
US commerce secretary Gina Raimondo warns that the global shortage of critical semiconductors is likely to extend well beyond next year.
Due to shutdowns of key Asian suppliers during covid, she doesn’t foresee any real relief before 2024.
But despite these concerns, Morgan Stanley believes the market may have completely overlooked how Altium may benefit.
The broker's channel checks confirm strong demand and use of Altium software as users seek help to navigate this supply tightness.
What the market has struggled to connect the dots on is exactly how creative PCB designers are in thinking outside the box.
What became evident at Morgan Stanley's recent San Francisco TMT was that the electronic printed circuit board (PCB) software business is experiencing higher demand due to requests by PCB designers looking to re-purpose chips for new ends.
It’s understood the take-up of the new cloud-based Altium 365 is also benefiting from all the increased demand.
While Morgan Stanley keenly awaits detail on the monetisation strategy of 365, the broker notes that as the leading cloud product, the strength of Altium’s first half result seems likely to continue.
At the half year, Altium delivered strong revenue growth of 28% to US$102.2m, while the reported and underlying earnings margin was 34.1% for the half, up 11.4% on the previous period.
Altium share price over 12 months.
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