Shares of Informatica Corporation (NASDAQ: INFA) gained more than 15 percent this year as rumors emerged that the company was a target for private equity. Mizuho Securities downgraded Informatica this morning as it argued that the speculation is fully priced in.
Additionally, Mizuho said it believes that the presence of the activist investor might be prohibitive to management's ability to "execute on its near-term objectives." Mainly, with uncertainty around who will be running Informatica and how, Mizuho argued that the company will struggle to sign long-term contracts. That puts the company in a weaker position, making it more likely that it can operate independently.
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Further, pricing Informatica with the same valuation that its competitor, TIBCO, was taken private at implies a $45-46 per share valuation. Therefore, paying more than the high-40s for the company "will be difficult," even given the fact that Informatica's solution is better than TIBCO's.
At current levels, Mizuho said that Informatica's risk/reward is appropriately balanced. If investors start to view an acquisition as less likely, Mizuho opined, the stock should trade to the high-$30s.
Informatica closed yesterday at $44.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.