Shares in Cognos (CSN TSX) zipped up the most in a year today. About a 10 percent pop. For good reason most would say. Its chief competitor Business Objects of France is being taken out at a fat premium by SAP of Germany. Consolidation is gripping the business software sector and Cognos is the only standalone left. RBC analyst Mike Abramsky figures there’s a 95% chance Cognos will be acquired now. Abramsky upped target on the stock to $59. That's about 11 bucks higher than where the stock closed today. A nice gain for sure if everything pans out as planned.
Another analyst I spoke to on the phone today had a wee bit of a different take though. Nathan Schneiderman of Paradigm Capital in California says investors should not be buying shares in Cognos. He views the SAP acquisition of Business Objects as a negative development for Cognos and has actually cut his rating from a buy to a hold. Reason being in recent months, both of Cognos’ chief competitors have been acquired. Business Objects by SAP and Hyperion solutions by Oracle. Neither Oracle nor SAP had their eyes on Cognos and neither is likely to pursue Cognos now. Not good says Schneiderman. Furthermore a Cognos takeout is likely to take months to materialize. The company’s Q3 earnings due out in about 8 weeks will likely be released before any deal is announced. In Q2 the company missed the street and the stock sold off. That Schneiderman says could happen again.
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