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Ingram Micro Hits a 52-Week High - Analyst Blog

Posted: 4/10/2014 9:50:00 AM
Referenced Stocks: SMB;CRM;CSCO;IM;VMW

Shares of Ingram Micro ( IM ) hit a new 52-week high of $30.82 on Apr 9, eventually closing at $30.56. The closing share price also represents an extraordinary one-year return of 58.18% and a year-to-date return of 31.44%.

Some of the current optimism surrounding the shares is related to the introduction of Ingram Micro's Cloud Marketplace globally. First launched in North America, the Cloud Marketplace generated a huge response which prompted the company to launch it on a global scale.

Ingram Micro has been striking distribution deals with a number of original equipment manufacturers thus expanding its product portfolio. Recently, it forged deals with VMware ( VMW ) and Cisco ( CSCO ) among other vendors. Moreover, Ingram Micro's exposure in cloud computing products is expected to remain its key growth driver.

The Ingram Micro Cloud Marketplace comprises of more than 200 cloud-based solutions from over 70 vendors, which include bellwethers such as ( CRM ) and AVG Technologies. The company has added several cloud service providers such as Charter, Logix and Softlayer to expand its cloud-based offerings.

Ingram Micro's initiative comes at an opportune moment as cost benefits of cloud computing are compelling the companies to engage in massive information technology restructuring and upgrades.

According to the latest study by IHS Inc., spending on cloud-based services should surge almost three times and reach $235 billion in 2017 from $78.2 billion in 2011. We expect this to work in favor of distributors like Ingram.

Separately, Ingram Micro has been gaining from increased orders from small & medium business (SMB) organizations in Europe, particularly in Germany and the U.K. Ingram is now targeting the SMB segment in a more comprehensive way, not just in Europe but across all regions. However, the company's significant exposure to Europe and its high debt burden are concerns, going forward.

Currently, Ingram Micro has a Zacks Rank #2 (Buy).

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