IBM Corp. (IBM) has signed an agreement to buy Spanugo, a US-based provider of cybersecurity solutions, to help meet the security demands of its public cloud business.
The terms of the deal were not disclosed. IBM said that it will integrate the Spanugo software into its public cloud to support stringent safety requirements of its clients in highly regulated industries. Shares rose 2.4% to $124.62 in pre-market trading.
At the end of last year, IBM said that it was building a financial services-specific public cloud, the first of its kind, to help address the requirements of institutions, such as banks, for regulatory compliance, security and resiliency.
The Spanugo software will provide preventative and compensatory controls for financial services regulatory workloads, proactive and automated security, leveraging the industry’s highest levels of encryption certification. The software includes a security control center that will enable IBM clients to define compliance profiles, manage controls and, in real time, monitor compliance across their organization.
“IBM is committed to building the industry’s most secure and open public cloud for business,” said Howard Boville, SVP at IBM Cloud. “Bringing Spanugo’s technology into our financial services public cloud will help provide our clients with evidence of their ongoing compliance, in real time.”
Compliance and security management has become more complex as more and more clients move significant and sensitive workloads to the cloud, IBM added. Businesses in highly regulated industries, including financial services, healthcare, insurance, telco and more, need cloud platforms that can protect sensitive information and run workloads subject to strict regulatory and compliance guidelines.
Once integrated into IBM’s public cloud services, the Spanugo software will also aim to reduce the likelihood of a successful cyber attack.
Shares in IBM, which have surged some 28% in the past two months, are now down just over 9% year-to-date.
Bank of America’s Wamsi Mohan maintains a Buy rating on the stock with a $145 price target, saying that IBM will benefit from doubling down on the shift to hybrid cloud, synergies and incremental cost cuts resulting from last year’s Red Hat acquisition, and a strong financial position.
Turning now to Wall Street, analysts are cautiously optimistic about the stock’s outlook. The Moderate Buy consensus breaks down into 4 Buy ratings versus 8 Hold ratings. The $132.36 average price target suggests shares have 8.8% upside potential in the coming 12 months. (See IBM stock analysis on TipRanks).
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