As Autodesk ends discussions to buy Altium, should you buy or sell ADSK stock?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 19, 2021
  • Autodesk shares pulled back 2% on Monday morning after news it ended discussions to buy Altium.
  • Altium rejected Autodesk’s offer of A$5.25 billion after raising its bid from A$38.50 to A$40.00 per share.
  • Is ADSK stock a buy after the pullback?

Autodesk Inc. (NASDAQ:ADSK) stock price pulled back 2% on Monday morning after the company ended discussions to buy Australian software company Altium Limited (ASX:ALU). Altium rejected Autodesk’s improved offer of A$5.25 billion or A$40.00 per share from the initial bid of A$5.05 or A$38.50 per share.

According to Reuters, an Autodesk spokesperson said

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We are not commenting on matters with Altium but can confirm that acquisition discussions have ceased at this time.

Altium shares slumped more than 14% after the news about Autodesk walking away from the deal broke.

Should you invest in Autodesk in Q3 2021?

Autodesk shares trade at a relatively steep P/E ratio of 50.22, making the stock less attractive to value investors. However, when we look at earnings growth expectations, there is a lot of excitement about the ADSK stock. Analysts expect Autodesk earnings to grow by a whopping 440% this year and at a compound annual growth rate of 35.58% for the next five years.

Therefore, the ADSK stock looks compelling to growth investors willing to overlook short-term bottlenecks. The company’s decision to pull out of the Altium acquisition negotiations could prove crucial in its growth story. The decision leaves room for Autodesk to assess other more lucrative acquisitions in the near future. 

Therefore, although the ADSK stock price suffered after the company ended Altium discussions, the pullback could be a perfect opportunity to invest in ADSK shares now.

Source – TradingView

Technical overview: Autodesk price prediction for Q3 2021

Technically, Autodesk’s share price appears to have pulled back closer to the 100-day moving average. It also trades closer to the support trendline of the triangle formation. Therefore, ADSK stock seems to be poised for an imminent rebound following Monday’s pullback.

Investors can target profits at approximately $299.17 or higher at $309.84. The key support levels are $276.18 and $265.23.

Bottom line: Why buy ADSK shares now?

Although Autodesk’s purchase of Altium may be off now, there is still a chance that the company will continue looking for potential strategic acquisitions in the near future. Therefore, Monday’s pullback presents an exciting opportunity to buy the stock ahead of the rebound. In addition, the company’s earnings growth expectations are also a catalyst for growth investors look forward to.

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