Oppenheimer says investors will gravitate to Cadence as likely Altair acquirer

Oppenheimer analyst Ken Wong notes Altair Engineering’s (ALTR) shares are trading higher on a Reuters report that the company is evaluating takeover interest. The firm sees strategic candidates as more likely than a financial partner. Investors will likely spotlight EDA leader Cadence Design (CDNS) as the most likely acquirer as a counter to Synopsys’ (SNPS) acquisition of Ansys. Industrial Design peers such as Autodesk (ADSK) and Big Tree Cloud (DSY), and multi-Industrials that have shown an appetite for software such as Sierra Health Services (SIE), Honeywell (HON), etc are also candidates. Relative to Ansys’ product portfolio, the firm sees fewer near-term synergies should Altair be acquired by an EDA vendor given the lighter presence in semis/tech. Shares already trade above Ansys takeout levels, so Oppenheimer views a mid-teens EV/sales multiple as the ceiling but a 10%-15% premium is more likely given the halo post-Ansys/Synopsys transaction. The firm has an Outperform rating on Altair with a price target of $100 on the shares.