HashiCorp (NASDAQ: HCP) was downgraded to Neutral from Buy by the investment bank BTIG after the stock’s recent run-up from merger and acquisition speculation. HashiCorp closed nearly 19% higher on Tuesday following a report that IBM (IBM) is nearing a deal to acquire the firm. It continued its climb on Wednesday, inching up 2% during the early minutes of market action.
BTIG reported in a note that there is still some uncertainty on a deal being consummated and a typical approval/closing process in the six to nine-month range. An acquisition of HashiCorp would add to IBM’s software and cloud capabilities.
Analysts at Bank of America Securities stated that if a transaction were to take place, HashiCorp’s public cloud management suite could prove to be a natural extension to IBM’s Red Hat offerings for private cloud operating system (Linux) and management. This would allow IBM customers to run workloads across a hybrid cloud environment via a single vendor. The bank increased its price target on HashiCorp to $32 from $28.
A deal may be announced as soon as today as IBM is scheduled to report first-quarter results after the close of trading. A consensus of analysts expects the firm to earn $1.59 per share on $14.54B in revenue.
