LogMeIn's Newest Merger Is A Game-Changer

Barclays thinks that LogMeIn Inc (NASDAQ: LOGM) would find GoTo Deal as a game changer. The firm thinks there are enough ways for the company to win apart from traditional synergies. Therefore, analyst Raimo Lenschow upgraded shares from Underweight to an Overweight rating and lifted target price from $82 to $105 on the stock.

The brokerage is confident of the company delivering more than the guided range of cost synergies once its merger with Citrix Systems Inc (NASDAQ: CTXS) is completed, citing high overlap between the two. The addition of Elliott Management's board seat strengthened confidence.

Barclays thinks LogMeIn has several levers to pull like raising price of a number of products to generate solid growth. The firm thinks the company has the potential to undergo a big restructuring involving closing down of some of the not doing well products.

"Beyond traditionally OpEx synergies, we believe the company will be able to boost cash flow by changing billings terms on the GoTo products. Capital returns are likely to follow given the increased cash flows, making the stock even more compelling," the analyst said in a note.

The brokerage sees the merger as a consolidation move and not aimed at TAM expansion. The firm that the two companies compete each other in main product lines and that offered a number of areas to cut down duplicative costs. Analyst sees the company consolidating product lines.

At time of writing, the stock gained $3.02, or 3.34 percent, to $93.41.