Shares of Alteryx (NYSE:AYX), the data-analytics software maker, were pulling back today as analysts reacted to news that Broadcom (NASDAQ:AVGO) was in talks to acquire SAS Institute, a privately held Alteryx competitor.
Investors took the news as a sign of intensifying competition, and Alteryx stock finished the day down 4.6%.
According to The Wall Street Journal, which first broke the news, chip-maker Broadcom is planning to take over SAS Institute in a deal valued between $15 billion and $20 billion. While that news could indicate potential interest in Alteryx from an acquirer, at least one analyst thought the deal would be a negative for Alteryx.
Rosenblatt analyst Blair Abernethy said that the acquisition would pose a challenge for Alteryx by giving Broadcom, valued at roughly $200 billion, a larger profile, and sales and marketing resources. However, Abernethy maintained a buy rating and a price target of $130.
On the other hand, Citigroup analyst Tyler Radke said that the development would be a positive for Alteryx, arguing that it provides a floor on the stock price. He also anticipates potential cost-cutting at SAS, which could open up the door to some of its rivals. Radke maintained a buy rating and a price target of $136.
After flailing through much of 2020, Alteryx has looked like an acquisition target for some time with a beaten-down stock price and a valuable product that has struggled at times to make the transition to the cloud.
The company’s growth slowed dramatically last year. Founder Dean Stoecker stepped down as CEO and was replaced by Mark Anderson. With shares down more than 50% from their highs last year, Alteryx stock poses sufficient risk to investors. Any sign that the stock could be a potential acquisition target should be taken as a positive for the company.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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