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International Business Machines (IBM) plans to acquire BoxBoat Technologies, a hybrid cloud consulting firm.IBM did not divulge the financial terms of the deal. The acquisition, subject to customary closing conditions, is slated to conclude in the second quarter of 2021.BoxBoat enables organizations to establish containers and Kubernetes to support cloud solutions. BoxBoat helps Fortune 100 and government clients to modernize their existing DevOps solutions.
The buyout will expand IBM’s mulicloud transformation and hybrid cloud services to its customers. The deal will increase IBM’s presence in the growing cloud professional services market and also boost Red Hat OpenShift adoption around the world.
IBM’s Senior Vice President of Hybrid Cloud Services, John Granger, said, “Our clients require a cloud architecture that allows them to operate across a traditional IT environment, private cloud and public clouds. That’s at the heart of our hybrid cloud approach.”
Granger added, “No cloud modernization project can succeed without a containerization strategy, and BoxBoat is at the forefront of container services innovation.” (See IBM stock charts on TipRanks)
On July 2, IBM’s President Jim Whitehurst announced his resignation. Whitehurst was a key figure in the Red Hat integration. He will, however, continue to serve as a senior advisor to IBM CEO Arvind Krishna.
On July 6, Morgan Stanley analyst Kathryn Huberty reiterated a Hold rating on the stock with a $152 price target (8% upside potential).
Huberty believes Whitehurst’s departure to be “more of a natural progression than a red flag.”
She further added, “While investors are concerned that this has negative read-throughs for the health of IBM’s hybrid cloud business and/or future outlook, we see this as a natural progression for Jim, as most of the Red Hat integration is complete.”
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 4 Buys, 3 Holds, and 1 Sell. The average IBM price target of $151.75 implies 7.8% upside potential from current levels. Shares have increased 9.5% over the past six months.
IBM scores a 6 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.
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