S&P Global Augments AI Capabilities With Kensho Acquisition
S&P Global Inc. SPGI recently inked an agreement to acquire Kensho Technologies Inc. for approximately $550 million in a combination of cash and stock, to boost its artificial intelligence (AI) capabilities and thwart competition. The transaction is likely to be completed by early second-quarter 2018, subject to the fulfillment of mandatory closing conditions and other regulatory approvals.
Based in Cambridge, MA, Kensho is a premier provider of next-generation AI, analytics, machine learning and data visualization systems to leading investment firms and banks in the Wall Street as well as the National Security community. This Harvard Square start-up firm has created a niche market for itself since its inception in 2013 by developing and deploying scalable AI systems to solve some of the hardest analytical problems across the globe.
The buyout will facilitate S&P Global to improve its core operations by applying actionable insights through the use of AI solutions and sophisticated algorithms, thereby augmenting its efficacy. On the other hand, the transaction will enable Kensho to leverage S&P Global’s deep data sets, global-scale analytics platforms, essential benchmarks and strong leadership team to better serve clients while retaining the independent brand identity.
The acquisition is the second of its kind. The first was S&P Global’s buyout of a New York-based data analytics private company, Panjiva Inc. in February. Panjiva — a leader in machine learning and data analytics — provides deep, differentiated, sector-relevant insights on global supply chains, leveraging data science and technology to make sense of large, unstructured datasets. It offers customers macro data covering 95% of global trade flows and transactional data covering 35% of the same. S&P Global expects Panjiva to enhance its Global Market Intelligence's data and analytical offerings for diverse customers throughout the world, generating higher top-line growth. With such opportune acquisitions, S&P Global has outperformed the industry in the last six months with an average return of 24.2% compared with a gain of 13% for the latter.
S&P Global expects the Kensho acquisition to be dilutive to its GAAP earnings for 2018 and has accordingly revised its earlier guidance. It currently expects GAAP earnings in the range of $7.95-$8.10 per share, down from earlier expectations of $8.15-$8.30. However, adjusted earnings’ guidance is reiterated at $8.45-$8.60 per share.
S&P Global carries a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include TransUnion TRU, Verisk Analytics, Inc. VRSK and IHS Markit Ltd. INFO, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TransUnion has an expected long-term earnings growth rate of 10%. It exceeded estimates in each of the trailing four quarters with an average beat of 5.2%.
Verisk has an expected long-term earnings growth rate of 11%. It exceeded estimates thrice in the trailing four quarters with an average beat of 3.2%.
IHS Markit has an expected long-term earnings growth rate of 11.6%. It exceeded estimates twice in the trailing four quarters with an average beat of 1.8%.
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