Private equity firms are well armed with cash, and some on Wall Street think they may be close to a buying binge, especially where small and mid-cap tech firms are concerned. In fact, according to Preqin’s 2017 Global Private Equity & Venture Capital Report, private equity firms’ assets under management, encompassing funds focused on buyout, growth, venture capital, secondaries and related strategies, has ballooned to $2.49 trillion as of June 2016, more than doubling from the end of 2006.
A new research report from Oppenheimer makes the case that we could be in the midst of a big consolidation of small-mid cap telecom and cloud companies, and with debt still reasonably cheap, companies in the $500 million to $3 billion range are drawing the most interest.
The report lists several top companies in and out of the firm’s research coverage that could be solid targets. Their stocks are best suited for aggressive accounts with a high risk tolerance.
This stock was hit hard recently when the company gave very disappointing guidance for the second quarter. Akamai Technologies Inc. (NASDAQ: AKAM) provides cloud services for delivering, optimizing and securing content and business applications over the internet in the United States and internationally.
The company offers performance and security solutions designed to help websites and business applications operate while offering protection against security threats. It also provides media content delivery solutions that are designed to deliver movies, television shows, live events, games, social media, software downloads and other content on the internet in fixed-line and mobile networks; adaptive delivery solutions for streaming video content; and download delivery solution that offers accelerated distribution for large file downloads, including games, progressive media files, documents and other file-based content.
The sell-off was surprising as, although the guidance was lower, the severity surprised many on Wall Street, and perhaps makes the company even more attractive.
The stock is rated Overweight at Oppenheimer, with a $70 price target. The Wall Street consensus target is $63.65. The shares ended trading last Friday at $47.38 apiece.
This company has long been touted as a potential takeover target. 8X8 Inc. (NASDAQ: EGHT) offers a cloud-based solution for business communications and collaboration on a unified platform spanning voice, video, contact center, and desktops that replaces legacy and expensive on-premise systems.
The service is delivered as an application that follows the user regardless of device (office phone, smartphone, desktop, tablet). Features include voice, video, text, fax, audio conferencing and integration with enterprise resource planning and customer relationship management systems.
The company has posted solid results this year, and although it is not covered by Oppenheimer, it is well liked on Wall Street.
The posted consensus price target for the shares is $18.09. The stock ended last week at $13.15 a share.
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