It happens every year, and 2018 won’t be any different. Larger companies looking to add to growth in addition to that of the organic or internal variety scan the field for purchases and acquisitions that are easy to bolt on and could add returns in a timely fashion. This year the process may even speed up some as the market sell-off that happened last month already may have put some companies in the sights of acquirers.
In what is a yearly and very all-encompassing report, the analysts at RBC again go through every sector looking for possible buyout candidates. Last year, the company’s takeover screens yielded 20 takeouts that were eventually acquired over the following 12 months.
One screen that should be of interest to many investors is the potential buyout candidates in the optical and networking sectors. With constant new innovations, and a growing dependence on the cloud for storage, computing, data and content streaming, and much more, the chances for mergers and acquisitions activity to jump are for real.
We cross-referenced the RBC potential takeout candidates seeking the highest profile names and found five that look like solid choices.
This red-hot IPO from 2016 has backed up huge over the past two years. Acacia Communications Inc. (NASDAQ: ACIA) is a leading supplier of high-speed coherent optical interconnect products to network equipment manufacturers, hyperscale cloud companies and service providers.
The company’s foundation is in its Digital Signal Processing (DSP) and a unique approach with its silicon-based photonic integrated circuit (SiPhi PIC). The company primarily combines the DSP and PIC to create modules, which are integrated into optical/networking equipment to provide high-speed optical interconnect.
The Wall Street consensus price target is $44.09. The shares closed last Friday at $43.92. The 52-week trading range for the shares is $33.68 to $61.15.
This company has had a very up and down 52 weeks and frequently has been the subject of takeover rumors. Ciena Corp. (NASDAQ: CIEN) is a vendor for high-capacity optical transport and Ethernet switching equipment to carriers, enterprises, cable operators and governments. It specializes in transitioning legacy communications networks to converged, next-generation architectures capable of efficiently delivering a broader mix of high bandwidth services.
The company’s Converged Packet Optical segment offers networking solutions optimized for the convergence of coherent optical transport, Optical Transport Network (OTN) switching and packet switching. Its products comprise the 6500 Packet-Optical Platform, 5430 Reconfigurable Switching System, CoreDirector Multiservice Optical Switches and OTN configuration for the 5410 Reconfigurable Switching System.
Top analysts feel that Verizon’s metro 100G buildout will be a focus for 2018, and the company could see catch-up spend from the now combined Centurylink. In addition, the new Waveserver products likely will continue to ramp as additional customers are added.
The consensus target price is $30.01. The shares closed trading on Friday at $27.20, in a 52-week range of $19.40 to $27.98.