JMP Sees $23/Share Takeout Price For Infoblox

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Infoblox Inc BLOX has reportedly received a buyout offer from Thomas Bravo, a private equity firm, and is considering hiring an advisor to look over the various strategic options. JMP Securities’ Erik Suppiger maintained a Market Outperform rating on the company, with a price target of $20.

Ideal Acquisition Candidate

Suppiger believes Infoblox’s leading market position, large installed base and “sticky” maintenance revenue stream make it an attractive acquisition candidate, particularly for private equity.

“We think it is likely that the company would be receptive to an acquisition and we believe a reasonable price would be ~$23. A share price of $23 represents a forward EV/Sales multiple of 3x, in line with the median multiple of recent IT infrastructure acquisitions in our coverage universe,” the analyst added.

Why Infoblox Could Accept An Offer

Suppiger outlined three reasons why Infoblox could accept the offer.

Firstly, the company has just completed a key product refresh and growth has decelerated more rapidly than expected.

In addition, there has been significant turnover among its executive staff over the past year, including a new CEO, CFO and Head of Sales.

Lastly, an activist shareholder, who established a new position just a few weeks ago, is likely to prompt significant cost cuts at Infoblox, which would be easier to achieve as a private firm.

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Posted In: Analyst ColorLong IdeasReiterationAnalyst RatingsTrading IdeasErik SuppigerJMP Securities
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