PagerDuty To Snap Up Rundeck For $100M; Street Is Bullish

PagerDuty, an operations management specialist, has agreed to acquire DevOps automation startup RunDeck for $100 million in a cash and stock deal. PagerDuty will pay about 60% in cash and 40% in its common stock as part of the transaction, which is expected to close by the end of October 2020. Shares were up about 8% on Monday.

PagerDuty (PD) said the acquisition would strengthen its leading incident response offering with intelligent machine automation that would bring increased productivity to resolution and recovery efforts.

PagerDuty’s CEO Jennifer Tejada said that “Rundeck’s impressive track record in providing scaled automation for DevOps teams in the world’s largest companies, along with their easy to use, practitioner focused offering make them a highly complementary extension for PagerDuty.” (See PD stock analysis on TipRanks).

This week, PagerDuty will host its annual flagship virtual conference, and Monness analyst Brian White believes that it will be an eventful one with the presence of high-profile tech leaders and PagerDuty’s innovations. He maintained a Buy rating on the stock with a price target of $35 (30.6% upside potential), saying that “PagerDuty plays squarely into the digital transformation trend and commands a less demanding valuation compared to other next-gen software vendors in our universe.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 3 Buys and 1 Hold. The average price target of $33.50 implies upside potential of about 25% to current levels. Shares have increased 14.6% year-to-date.