Will SolarWinds Stop Trading Publicly?

According to a recent FBR report on SolarWinds, the board’s review of strategic options following the expression of third party interest “may result in SolarWinds continuing to pursue value-enhancing initiatives as a standalone company or a possible sale or other form of business combination.”

Ives noted that this is a “potentially rosy scenario” for shareholders who have stuck with this company through thick and thin, especially over the last year – a period over which it has faced several execution issues.

Financial Estimates

From a financial standpoint, FBR estimated SolarWinds could be acquired for $55 to $60 per share (roughly 25 times the Street’s fiscal 2016 EPS estimate) as it believes the main bid would come from private equity.

Related Link: SolarWinds Announces Review of Strategic Alternatives

“Given the company’s unique tool based, low touch model we see no strategic buyers for SolarWinds as a financial buyer clearly makes the most sense given its free cash flow generation and stickiness,” the report expounded.

Looking Ahead

Fundamentally speaking, the expert thinks the company is starting to witness a rebound from a poor performance in the second quarter and should be poised to deliver some seasonal strength in the second half of the year.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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