TIBCO Rejoins the Merger Rumor Mill – Not for the First Time

TIBCO had been staying under the radar prior to headlines and a stock halt. At least that was the case until its stock skyrocketed up over 10% to $21.25 after closing at $19.30 the prior day.

24/7 Wall St. would throw out a caveat that TIBCO is in a space in software where there has been much M&A activity over the last ten to fifteen years, from larger companies as well as from private equity. Also please note — again — TIBCO has been a buyout rumor stock before, with the likes of Hewlett-Packard and SAP having both been prior suitors if you visit the rumor mill archives of the past.

In fact, deals were supposedly closer than now in years past – but recently, not so much. When TIBCO reported its earnings in June, the report was a serious earnings disappointment but one that came with a silver lining. Many analysts downgraded the stock after earnings a quarter ago, thinking that the core business wasn’t growing and/or that a buyout was not likely.

Analysts from Stifel, Mizuho Securities, Hillyard Lyons, and JMP were the firms that had downgraded it at the start of the summer. During the same period, Deutsche Bank, Pacific Crest, RBC Capital Markets, and Susquehanna all maintained their ratings. Back then, the consensus price target had been north of $25 at the time – but that is now closer to $21.30.

As far as now, well the price is a tad higher than it was at the start of June but the consensus group of price targets remains much lower. The 52-week range for TIBCO software is $18.20 to $27.15, with shares having declined handily from its high back in September.

Again, TIBCO has been in the rumor mill before. That does not mean that a deal cannot occur, but this isn’t the company’s first pony ride through the rumor mill.