WESCO International WCC has signed an agreement to take over Fremont, CA-based Rahi Systems Holdings, for $217 million.
Rahi Systems Holdings offers hyperscale data-center solutions worldwide to help customers across the globe manage and simplify technology.
Post acquisition, Rahi Systems Holdings will be part of WESCO’s Communication and Security Solutions strategic business unit.
With the acquisition of Rahi Systems Holdings, WESCO will expand its portfolio of data-center solution offerings.
This will help WCC in gaining momentum among contractors, integrators and end-user customers. This, in turn, will contribute to its top-line growth in the days ahead.
Evidently, this will aid WESCO in winning investors’ confidence in the near term as well as the long haul.
Shares of WCC have been up 4.8% in the year-to-date period, against the Computer and Technology sector’s decline of 31.4%.
WESCO International, Inc. Price and Consensus
WESCO International, Inc. price-consensus-chart | WESCO International, Inc. Quote
Efforts to Boost Prospects
With the buyout of Rahi Systems Holdings, WESCO is expected to expand its presence in the booming hyperscale data-center market.
The underlined market is witnessing significant growth in recent times owing to the increasing number of cloud services and rising on-premise migration to cloud or colocation facilities, triggered by the coronavirus.
According to a ReportLinker report, the global hyperscale data-center market is expected to see a CAGR of 5.69% during the 2022-2027 forecast period.
The aforesaid market is likely to reach $585 billion by 2030, witnessing a CAGR of 25.9% from 2021 to 2030, per an Allied Market Research report.
Strengthening Communication and Security Solutions Unit
On the back of Rahi Systems Holdings’ data-center solutions, WCC aims to bolster its Communication and Security Solutions business unit, which became integral.
The unit is consistently driven by the strong performance of network infrastructure businesses. This is owing to global hyper-scale data centers and a spike in structured cabling, led by growth in return-to workplace activities.
In addition, increased demand for IP-based surveillance and the growing adoption of cloud-based technologies are creating demand for security solutions, which in turn, is contributing well to the unit’s growth.
Continued strong demand from multinational customers for professional Audio-Video projects and in-building wireless applications remains a catalyst.
The business unit generated revenues of $1.6 billion, accounting for 31.8% of total second-quarter 2022 revenues. Also, revenues increased 9.6% from the year-ago period’s level.
Zacks Rank & Other Stocks to Consider
Currently, WESCO sports a Zacks Rank #1 (Strong Buy). Investors interested in the broader Zacks Computer & Technology sector can also consider some other top-ranked stocks like ASE Technology ASX, Teradata TDC and Monolithic Power Systems MPWR, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
ASE technology has lost 29.2% in the year-to-date period. The long-term earnings growth rate for ASX is currently projected at 23.1%.
Teradata has lost 23.6% in the year-to-date period. The long-term earnings growth rate for TDC is currently projected at 23.1%.red
Monolithic Power Systems has lost 13.4% in the year-to-date period. The long-term earnings growth rate for MPWR is currently projected at 25%.
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