Software Stock Strengthens Amid Buyout Buzz

Vista Equity Partners could acquire the software company, according to reports

Coupa Software Inc (NASDAQ:COUP) is building on Wednesday’s nearly 29% pop, up 3.8% at $61.09 ahead of the bell. On Wednesday, Bloomberg reported that Vista Equity Partners is in talks to acquire Coupa and is working with an advisor on the acquisition, according to those familiar with the matter. 

Wednesday’s bull gap put COUP back above recent pressure at the 40-day moving average, though the breakout stopped just short of the 120-day trendline. Should today’s gains hold, Coupa stock could clear this area for the first time in over a year. Year-to-date, the security remains down 62.7%. 

The stock has been the subject of several analysts this week. Morgan Stanley and Citigroup cut their price targets to $75 and $66, respectively. The 12-month consensus price target now sits at $71.82, a 15.9% premium to Wednesday’s close. Meanwhile, 10 of the 20 analysts in coverage consider the stock a “buy” or better, while the remaining half say “hold” or worse. 

Options traders have been extremely bullish of late. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 50-day call/put volume ratio of 3.36, which sits higher than all other readings from the past year. 

Echoing this, the security’s Schaeffer’s put/call open interest ratio (SOIR) of 0.65 stands in the relatively low 18th percentile of its 12-month range. In other words, short-term options players are more call-biased than usual. 

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