Over The Wire Holdings will acquire Digital Sense which provides customisable and scalable cloud offerings to enterprise and government customers.
The cloud services include infrastructure as a service, desktop as a service, storage as a service and data protection as a service. The three largest customers are local or state governments.
Cloud solution is one of three key pillars for Over The Wire Holdings. The three are cloud, connect and collaborate. Digital Sense is both a customer and supplier to the company and according to the analyst the business and its technical solutions are already well known to the company.
The deal makes strategic sense to Morgans and bolsters the company’s cloud offering and enterprise and government base. It’s also considered to make financial sense by delivering double-digit cash EPS accretion and double-digit cash return on equity (ROE).
Morgans upgrades cash EPS forecasts by 8% in FY21 and 20% in FY22.
The Hold rating is unchanged and the target price is increased to $5.01 from $4.38.
Sector: Software & Services.
Target price is $5.01.Current Price is $4.60. Difference: $0.41 – (brackets indicate current price is over target). If OTW meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).
