Executives from Taleo Corp., which provides recruiting services to companies, are expected to discuss a recent acquisition at an analyst meeting on Wednesday.
Taleo recently paid $128.8 million for privately held recruitment agency Vurv Technology Inc.
ThinkPanmure analyst Nate Swanson said the acquisition should boost margins and may add 10 cents to 20 cents per share to his fiscal 2009 earnings per share estimate of 77 cents.
"We believe the Vurv acquisition is a solid strategic move from both an offensive and defensive standpoint, which should provide significant operating margin leverage," Swanson wrote in a client note.
Swanson, who rates the stock "Buy," said the purchase eliminates a major competitor in the recruiting market and requires minimal integration.
"We believe Taleo will continue to support Vurv's existing customers, but ultimately look to migrate them to the Taleo platform over a period of 18 to 36 months," Swanson wrote.
Swanson's $34 price target implies upside of 59.9 percent to Tuesday's $21.26 closing price.
Chairman and Chief Executive Katy Michael Gregoire and Chief Financial Officer Katy Murray are expected to speak at Wednesday's meeting in New York.
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