JPMorgan started its coverage of Altair (NASDAQ:ALTR) with an Overweight rating and a price target of $86 per share, as indicated in a recent client note on Friday. The firm’s positive stance is based on Altair’s robust free cash flow and its growth potential.

The analysts highlighted Altair’s strong position in the stable and growing field of simulation and analysis. They project a significant growth in free cash flow (FCF) for the company, anticipating an increase of around 20% in the coming years. This growth is expected to be fueled by higher-than-average revenue increases, driven by Altair’s expanding market share in simulation and analysis, leveraging its unique capabilities in high-performance computing (HPC) and data analytics/artificial intelligence.

Additionally, JPMorgan pointed out Altair’s notably high operating leverage. While the firm anticipates a contraction in ALTR’s market multiple as margins align more closely with those of its peers, the overall outlook remains positive. JPMorgan forecasts an attractive potential upside of approximately 15% for Altair, positioning it for relative outperformance in the market.

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