IBM To Acquire SAP Firm TruQua To Bolster Hybrid Cloud Growth

Tech giant International Business Machines has reached an agreement to acquire TruQua Enterprises, an IT services and consulting SAP development partner that specializes in delivering financial and analytics solutions.

Don't Miss our Black Friday Offers:

Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

IBM (IBM) believes that the TruQua acquisition will enhance its expertise in migrating financial platforms to SAP and will further strengthen its hybrid cloud growth agenda. Specifically, the company feels that TruQua will help broaden its consulting capabilities to assist clients in implementing SAP solutions that will improve and automate financial management workflows, enhance operational efficiency and drive an enterprise-wide transformation through the adoption of SAP S/4HANA, the latest generation of SAP’s ERP business solutions.

The company did not disclose the financial terms of the acquisition and expects the transaction to close in the fourth quarter. (See IBM stock analysis on TipRanks)

Rahul Kalia, Global Managing Partner, Enterprise Cloud Applications, IBM Services, stated, “Our clients are reimagining their core finance processes with cloud, AI and other exponential technologies to drive increased value for their organizations. Our acquisition of TruQua further strengthens IBM’s deep global expertise in finance and demonstrates our continued commitment towards supporting Chief Financial Officers’ strategic initiatives.”

Last month, Citigroup analyst Jim Suva reiterated a Hold rating with a $140 price target following IBM’s 3Q results. In a research note to investors, Suva stated that the IBM story is getting increasingly complex and hard to model, pointing to the lack of guidance, the pending spinoff of the managed infrastructure services business, and estimated charges of $2.3 billion in 4Q and $2.5 billion next year for various restructuring moves, for which details have not yet been provided.

Suva noted, “We believe consensus Q4 EPS and cash flow [estimates] will move lower and there is risk that the seasonal Q4 budget spend may not materialize to the full extent as it has in the past.”

IBM scores the Street’s cautiously optimistic Moderate Buy analyst consensus based on 2 Buys and 5 Holds. Shares have risen 11.7% so far in 2020 and the average price target of $144.33 indicates an upside potential of 21.9% in the coming 12 months.