Technology major International Business Machines Corporation (NYSE: IBM), popularly known as IBM, recently announced that it has acquired a telco consulting services and solutions provider, Sentaca. The financial terms of the deal, which closed on January 31, 2022, have not been disclosed so far.
Following the news, shares of the company rose almost 1.5% to close at $135.60 in Tuesday’s extended trading session.
Strategic Impact
The acquisition is aimed at strengthening IBM’s hybrid cloud consulting business to offer its customers an opportunity to modernize its multiple cloud platforms and ensure efficient operations of their businesses.
Post the acquisition, Sentaca will join IBM Consulting’s Hybrid Cloud Services business to address clients’ strategic and technology challenges and address opportunities, including 5G and IoT.
Notably, Sentaca’s domain expertise, assets and client relationships will aid IBM in meeting the industry demand and strengthen its position as a prime systems integrator for the emerging network and 5G market.
Management Commentary
The Senior Vice-President of IBM Consulting, John Granger, said, “Our goal is to help modern networks thrive in an open, hybrid cloud environment that will bring edge and 5G to life for enterprises and consumers. The proliferation of mobile devices, wireless connectivity, and new media platforms is driving convergence among telco, media, and entertainment, which makes our acquisition of Sentaca all the more valuable for our clients.”
Stock Rating
Recently, Credit Suisse analyst Sami Badri reiterated a Buy rating on the stock. The analyst, however, raised the price target from $164.29 to $165, which implies upside potential of 21.7% from current levels.
Consensus among analysts is a Hold based on 5 Buys, 6 Holds and 2 Sells. The average IBM stock prediction of $145.75 implies upside potential of 7.5% from current levels. Shares have gained 18.8% over the past year.
Increased Hedge Fund Trading
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in IBM is currently Positive, as some of the top hedge funds that were active in the last quarter increased their cumulative holdings by 7,600 shares.
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