NEW YORK (TheStreet) -- Nimble (NMBL) has jumped nearly 3% for the afternoon after Summit Research identified the company as a likely acquisition target for firms looking to expand into the enterprise hybrid storage market.
WHAT'S NEW: Summit Research's Srini Nandury issued a research note identifying Nimble as a possible takeover target. Nandury and his firm "tend to agree" that the company is "THE acquisition candidate" in the sector and the analyst identifies NetApp (NTAP), EMC (EMC) and Cisco (CSCO) as potential buyers. Nandury notes that any takeover offer for Nimble would likely ignite a bidding war, as the company is "one of the best" hybrid storage firms. Hybrid storage is likely to be the product of choice in enterprise storage solutions "for years to come," said the analyst, making Nimble an "obvious" takeover target as both OEMs and all-flash vendors look to bolster their presence in the hybrid space. After considering Nimble's current 4.3x multiple as well as the 9.6x take out multiple in HP's (HPQ) acquisition of 3Par, Nandury said Nimble should fetch a take out multiple higher than 6x, or about $40 per share. The analyst reiterates a Buy rating on the stock and maintains a $40 price target.
WHAT'S NOTABLE: Summit's note follows EMC's $1.2B acquisition of Virtustream on May 26, in a move that CEO Joe Tucci said would position the company as a one-stop provider of hybrid cloud technology. On the same day, Nimble reported first quarter results that beat on both earnings and revenue, bumping the stock 2% for the day. Today's note from Nandury is frank about M&A activity in the sector, saying the company "will most likely get acquired" given its solid execution and new product pipelines in an already attractive space. If a deal does emerge and Nandury's speculated bidding war takes place, investors could enjoy a significant upside in the stock.
PRICE ACTION: Nimble rose 2.8% in afternoon trading to $28.36. Over the past three months, the stock has advanced more than 13%.
Reporting by John Graff.