JPMorgan initiated coverage of Altair (ALTR) with an Overweight rating and $86 per share price target in a note to clients Friday. The firm cited the company's free cash flow and potential upside as reasons for the bullish rating.
Analysts said they see the company as well positioned in the sticky, resilient, simulation and analysis market.
"We see best-in-class FCF growth of ~20% in the years ahead," analysts wrote. They see this growth driven by above-average top-line growth from a rising share in the simulation and analysis market through differentiated capabilities in high-performance computing (HPC) and data analytics/AI.
The investment bank also noted the company's "well above average" operating leverage. Furthermore, as margins normalize towards peers, JPMorgan expects ALTR's multiple to contract, but "with an end result that is still an attractive ~15% upside, enough for relative outperformance."