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Investors Business Daily
Investors Business Daily
Technology
REINHARDT KRAUSE

New Relic Surges On Report Private Equity Firms Readying Bid

Shares in software maker New Relic surged just before the market close on Wednesday amid speculation of a possible buyout. NEWR stock ended the day up nearly 11%.

Private-equity firms Francisco Partners and TPG are readying a bid around $5 billion for NEWR stock, according to a report in the Wall Street Journal.

New Relic's computer network monitoring tools measure and analyze the performance of business-critical applications. Further, many of its customers use cloud-computing platforms.

Rivals include Dynatrace, Datadog, Cisco Systems and Splunk.

NEWR Stock: Activist Investors

Activist investors owning shares in New Relic include JANA Partners and Engaged Capital.

In a note to clients earlier this year, NEWR stock analyst Adam Tindle of Raymond James said: "Case for takeout: (New Relic) optimizing the margin profile to run closer to competitor Dynatrace should be possible and create value."

Tindle also added: "The company has hit an inflection point in the back half of 2022, with margins returning and growth potentially accelerating amid a challenging spending environment. Activist investors see the longer-term prospects to drive increased shareholder value beyond the immediate term and constructively support the growth and margin expansion journey."

NEWR stock advanced nearly 11% to end the day at 83.84 during Wednesday's regular session. Further, in extended trading, shares rose 0.2% to 84 on the stock market today.

New Relic was profiled as the IBD Stock of the Day on April 19.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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