Needham & Company: Two SaaS Takeouts In Just over a Month Equal a Trend; SaaS Valuations Getting a Boost
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
25 Buy, 9 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Needham & Company on Software as a Service (SaaS): Two SaaS Takeouts In Just over a Month Equal a Trend; SaaS Valuations Getting a Boost
Analyst, Michael Huang, said, "SAP (NYSE: SAP) (Not/Rated) announced over the weekend the intention to acquire SFSF for $40/share (all cash), or roughly 8x EV/12Rev. This premium takeout multiple is likely great news for SaaS valuations, especially talent management/HR technology names including Teleo (Nasdaq: TLEO) (3.2x EV/12Revs), Ultimate Software (Nasdaq: ULTI) (5.4x), among others. With the 2nd SaaS strategic takeout in just over a month (Oracle (Nasdaq: ORCL) (N/A) buying RNOW for 5.5x EV/12Rev), it’s fair to conclude that SaaS M&A is heating up. Looking into our crystal ball, we believe that TLEO could be the SaaS name that gets acquired next and potentially by ORCL. Additionally, this takeout reflects the rising strategic importance of SaaS to large enterprises. Salesforce.com (NYSE: CRM) (5.6x) arguably is the highest quality , best scaled SaaS name in our universe that stands to benefit disproportionately from rising SaaS tide."
Analyst, Michael Huang, said, "SAP (NYSE: SAP) (Not/Rated) announced over the weekend the intention to acquire SFSF for $40/share (all cash), or roughly 8x EV/12Rev. This premium takeout multiple is likely great news for SaaS valuations, especially talent management/HR technology names including Teleo (Nasdaq: TLEO) (3.2x EV/12Revs), Ultimate Software (Nasdaq: ULTI) (5.4x), among others. With the 2nd SaaS strategic takeout in just over a month (Oracle (Nasdaq: ORCL) (N/A) buying RNOW for 5.5x EV/12Rev), it’s fair to conclude that SaaS M&A is heating up. Looking into our crystal ball, we believe that TLEO could be the SaaS name that gets acquired next and potentially by ORCL. Additionally, this takeout reflects the rising strategic importance of SaaS to large enterprises. Salesforce.com (NYSE: CRM) (5.6x) arguably is the highest quality , best scaled SaaS name in our universe that stands to benefit disproportionately from rising SaaS tide."
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