Technology major International Business Machines Corp (NYSE: IBM), popularly known as IBM, recently entered into a definitive agreement with private equity firm, Francisco Partners. IBM will sell its healthcare data and analytics assets, which are a part of the company’s Watson Health business, to Francisco Partners.
The financial terms of the deal, which is likely to close in the second quarter of the current year, have been kept under wraps. Following the news, shares of the company dropped by more than 1.1% to close at $129.30 during Friday’s extended trade.
Strategic Impact
With over two decades of experience in investing in technology companies with noted expertise in healthcare technology and investments, Francisco Partners seems well positioned to efficiently use IBM’s healthcare data and analytics assets.
Moreover, the assets sale will allow IBM to strengthen its focus further on its platform-based hybrid cloud and AI strategy.
Management Commentary
Senior Vice President of IBM Software, Tom Rosamilia, said “IBM remains committed to Watson, our broader AI business, and to the clients and partners we support in healthcare IT. Through this transaction, Francisco Partners acquires data and analytics assets that will benefit from the enhanced investment and expertise of a healthcare industry focused portfolio.”
Analyst Ratings
Recently, Evercore ISI analyst Amit Daryanani reiterated a Hold rating on the stock with a price target of $140, which implies upside potential of 8.2% from current levels.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 4 Buys, 3 Holds and 1 Sell. The average IBM stock price target of $150.88 implies the stock has upside potential of 16.6% from current levels. Shares have gained about 14.2% over the past year.
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