On Wednesday, BofA Securities updated its stance on HashiCorp Inc (NASDAQ:HCP) stock, raising the price target to $32 from $28, while maintaining a Neutral rating. This adjustment follows unconfirmed reports that IBM (NYSE:IBM) is nearing a potential acquisition of HashiCorp. In response to the news, HashiCorp's stock experienced a significant surge, closing approximately 25% higher.
The speculation about IBM's interest in acquiring HashiCorp has led to a notable increase in the company's share price, which now shows a 16% premium compared to its value on March 14, before any takeover rumors emerged. BofA Securities' analyst pointed out that HashiCorp's current market valuation reflects this heightened investor anticipation of a possible deal.
The analyst from BofA Securities believes that IBM would be a fitting strategic buyer for HashiCorp, should an acquisition proceed. The revised price objective of $32 is based on an increased revenue multiple, moving from 6.0 times to 7.0 times the company's projected 2025 earnings. The change mirrors the expansion of multiples among HashiCorp's peers.
The potential acquisition's specifics remain uncertain, with the possibility that it may not come to fruition. Nevertheless, the market reaction to the rumors has been pronounced, with HashiCorp's stock price adjusting to the newly reported developments. The BofA Securities analyst reiterated a Neutral rating, indicating a wait-and-see approach amidst the ongoing speculation surrounding HashiCorp's future.
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