Citi Steps To The Sidelines On Qlik Technologies, Explores 4 Potential Acquirers

Shares of Qlik Technologies Inc QLIK surged following news of a possible buyout. Citi’s Walter H Pritchard downgraded the rating for the company from Buy to Neutral, while raising the price target from $23 to $30.

Qlik Technologies’ market cap is currently at $2.7B, and a takeout would likely be at a premium from these levels. The deal size would likely be in range of $3B-$3.5B, which is large “but by no means a 'mega-deal' for any given large cap tech vendor,” analyst Walter Pritchard commented. He named four potential acquirers.

HP Enterprise

Hewlett Packard Enterprise Co HPE has a limited presence in self-service analytics. Although the company acquired Vertica in 2011, it has limited front-end capability. “This goes both for newer data discovery / self service product like QLIK as well as even static reporting,” Pritchard wrote.

Although Hewlett Packard Enterprise had indicated that it has no plans of making a large acquisition in 2016, the company may make an exception if it finds a purchase that “makes strategic sense,” the Citi report stated.

IBM

International Business Machines Corp. IBM may purchase Qlik Technologies in an attempt to expand their front-end visualization focus. “IBM has a significantly growing analytics presence with a focus on predictive analytics (SPSS acquisition) and machine learning (Watson technology),” Pritchard pointed out.

IBM’s analytics offerings include a data warehouse, following the Netezza acquisition, and the company’s BI capability came from the Cognos acquisition, although Cognos is “mostly focused on static reporting, a market opportunity that is not expanding,” the analyst mentioned.

Oracle

The current BI/visualization front-end product of Oracle Corporation ORCL has provided limited traction, while its financial analytics and reporting application, Hyperion, is underperforming the broader BI market. “The company has been heavily focused on migrating Hyperion to the cloud, thus a primarily desktop application (QLIK) is likely less of a focus,” the Citi report noted.

SAP

SAP SE (ADR) SAP has made a mark in the BI space vis the acquisitions of Business Objects and Crystal Decisions. SAP has a strong solution for static reporting. Although SAP’s Explorer product is focused on self-service and data discovery, there has been minimal traction for this. “We believe SAP is in the midst of a multi-year development effort to re-write its BI tools to be cloud native,” Pritchard wrote.

Of the four, Hewlett Packard Enterprise and IBM are the “most compelling from a strategic asset perspective,” the analyst added.