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Is the Altium (ASX:ALU) share price still a buy?

The Altium Limited (ASX: ALU) share price has been falling in recent months as the effects of COVID-19 continue to bite.

Altium is one of the largest businesses in the electronic PCB software space. One of its key software lines is called Altium Designer.

What has been going on?

Businesses that service consumers seem to largely be doing very well, apart from ones in industries like travel and sectors that rely on large groups of people.

However, some businesses that service other businesses are also struggling. Altium fits into that category in my opinion. Whilst it does have some huge, high-performing clients like Tesla, Microsoft, Google, Amazon and so on, it also has clients that are a lot smaller or are struggling.

In a recent trading update Altium said that for the half year to 31 December 2020. Its total revenue fell by 3% to US$89.6 million because of challenging COVID-19 conditions in the US and Europe, as well as challenging economic conditions in China, for licence compliance activities.

The company also recently announced the sale of its TASKING business. Altium will get US$100 million upfront from buyer FSN Capital, and another US$10 million which is conditional on achieving revenue targets in FY21 after the divestment. It’s expected to close by March 2021, subject to the usual conditions.

Does the difficulties mean Altium isn’t a good investment option?

Not necessarily. Sometimes the best time to buy is when it doesn’t look like the right time to buy. But, the business is not in as strong a position as it was a year ago overall.

However, unless Altium has lost its mojo compared to competitors, which I don’t think it has, then it will be able emerge from this difficult period as the market leader.

The push with the cloud offering called Altium 365 makes a lot of sense. Altium’s client base are likely to be attracted to the team collaboration elements of it. For Altium, Altium 365 could turn the business into a true software as a service (SaaS) operator.

Its goal of US$500 million has been pushed a bit further away, but I still believe that it can become the clear global market leader this decade.

At the current Altium share price it’s valued at 57x FY21’s estimated earnings. That seems expensive, but on a 5-year view, I think Altium could be a solid performer.

However, I like other ASX growth shares that continue to generate strong growth like Pushpay Holdings Ltd (ASX: PPH) even more.

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At the time of publishing, Jaz owns shares of Altium.

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