What happened
On yet another gloomy day for the stock market, DocuSign (DOCU 1.58%) was an outlier Tuesday, with its shares rising by nearly 2%. It seems that the latest rumor about the company has some legs, with the share price advancing cautiously higher on the scuttlebutt.
So what
That ball started to roll on Monday morning, following a report concerning a major tech company from a team of Evercore ISI analysts led by Amit Daryanani. That company is IBM (IBM 0.20%), which the prognosticators speculated might be on the hunt for a fresh acquisition. The team considers DocuSign, in addition to other niche tech businesses like Zscaler and Okta, to be a potential target.
Like many veteran companies, IBM has reached a certain level of maturity and is well capitalized. As such, it can pull the acquisition lever for a quick way to simultaneously lift its revenue and venture into new (or underdeveloped) business segments.
The Evercore ISI analysts believe now is a good time for the industry behemoth to go shopping. They wrote in a new note that "Higher growth tech companies have rerated lower since the year began; with valuation multiples becoming more attractive vs. a year ago, we think it could make sense for IBM to look to M&A as a way to drive revenue acceleration and/or further transform their business."
Now what
IBM has proven to be a hungry (if selective) acquirer over the years. Most prominently, it bought software developer Red Hat in a splashy, $34 billion deal that closed in mid-2019. So Evercore ISI's analysis makes sense and it's easy to imagine DocuSign or Okta getting a lucrative offer. But, as with any situation like this, right now that's pure speculation. Given that, investors would be wise not to trade DocuSign entirely on such a basis.
