IBD Stock Analysis
- After recent pullback to 50-day line, shares now close to forming a flat base
- Investors could buy off 10-week line; entry off flat base would be 126.65
- Stock’s Relative Strength line moving up; RS Rating is 95 out of a possible 99
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:38PM EDT on
Synnex (SNX) is the IBD Stock of the Day as the distributor of information technology products works on a possible flat base. Synnex stock rallied this year following the announcement of its merger with Tech Data.
Fremont, Calif-based Synnex on March 22 said it would merge with Tech Data, owned by private equity firm Apollo Global Management.
The merger would create the world’s largest IT distributor with an estimated $57 billion in annual revenue and more than 22,000 employees. The merger is expected to close in the second half of 2021.
When the deal closes, Synnex shareholders will own about 55% of the combined company, with Apollo owning 45%.
The merged company will distribute a wide range of computers, peripherals and electronic products. IT distributors merge to obtain greater scale to expand profit margins.
Synnex Stock: Tech Data CEO To Lead Combined Company
In addition, some products have been in short supply amid the coronavirus emergence and the corporate shift to remote work.
Tech Data’s Rich Hume will be chief executive of the merged entity. “The combined company will benefit from significant financial strength to invest in its core growth platform as well as next generation cybersecurity, cloud, data, and IoT technologies, which are experiencing explosive growth due to work from home and return to office trends,” he said in the March 22 news release.
Synnex stock rallied following the merger announcement. It hit a an all-time high of 126.55 on April 20.
Synnex stock recently pulled back to its 50-day moving average, and found support at the 50-day line. Aggressive investors could look for an early entry off the stock’s 10-week line as it works on a possible flat base. The conventional buy point is 126.65 if the flat base forms. Shares were up fractionally to 122.81 on the stock market today.
Synnex stock holds a Relative Strength Rating of 95 out of a best-possible 99. Its relative strength line is strong.
Synnex Spun Off Call Center Operator
In addition, Synnex holds an Accumulation/Distribution Rating of B-minus, according to IBD Stock Checkup.
The A/D rating analyzes price and volume changes in a stock over the past 13 weeks trading. The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
The IBD Wholesale Electronics group that includes Synnex ranks a strong No. 29 out of 197 groups tracked.
For the quarter ended Feb. 28, Synnex earned $1.89 per adjusted share, up 33% from the year-earlier period. Revenue rose 21% to $4.94 billion.
Synnex on Dec. 1 spun off Concentrix (CNXC), a call-center operator and Thursday’s IBD Stock Of The Day. Concentrix merged with Cincinnati-based Convergys in mid-2018.
Concentrix competes in the call-center business versus Alorica, Teleperformance and others.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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View more information: https://www.investors.com/research/ibd-stock-of-the-day/synnex-stock-rises-on-expectations-tech-data-merger-to-expand-profit-margins/