MGI Research

Saturday, Oct 24th

Last update02:31:08 AM GMT

Is CA an Acquisition Target?

For investors with interest in CA one key question stands out: How does this company generate meaningful returns on a go forward basis?  Is it likely to return to its acquisition strategy or has it itself become a target? In June of 2009, we were significantly positive on CA shares and highlighted that CA had similar operating characteristics to BMC Software (BMC) and near identical MGI-X measurements but at the time, the company was trading at a discount to BMC's EV/Revenue multiple.  Since then, CA shares have moved up from $17.62 on June 25th 2009 to $22.44 on September 23rd 2009, or a gain of about 27% (+$0.04 dividend) while BMC shares have appreciated by 11% during the same period. In this note, we look at various value creation scenarios for CA.

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