Vertex, Inc. (VERX), a global provider of tax technology solutions, has announced the acquisition of LCR-Dixon Corporation, an expert in SAP technologies and provider of transaction tax automation services and solutions. Shares spiked 2% on the news before closing the day flat at $19.02 on September 24.
LCR-Dixon offers SAP tax reporting solutions, SAP data management tools, and pre-developed ABAP solutions to optimize the integration between clients’ SAP and tax systems. These tools simplify tax complexities in the SAP environment and help clients maintain, analyze, and validate tax data in procure-to-pay as well as order-to-cash.
Vertex and LCR-Dixon were already working together as partners, integrating LCR-Dixon’s PLUS tools into Vertex’s tax determination software, which improved the performance of the SAP indirect tax processes. (See Vertex stock charts on TipRanks)
Commenting on the deal, David DeStefano, CEO of Vertex, said, “We believe the addition of LCR-Dixon’s unique suite of solutions with Vertex tax technology delivers an incomparable value to our customers who need to manage complex global compliance requirements… Vertex and LCR-Dixon have enjoyed a long-standing partnership and together have delivered best-in-class solutions to some of the world’s largest companies running SAP.”
In response to acquisition news, Needham analyst Joshua Reilly maintained a Buy rating on the stock with a price target of $30, implying 57.7% upside potential to current levels.
Stating that the acquisition was not material from a financial perspective, the analyst believes that the deal adds value to Vertex’s competitive position in the SAP ecosystem.
Reilly said, “We believe Vertex can improve their position over time with both potential new customers in the SAP ecosystem and LCR-Dixon customers not already with Vertex. We believe the SAP ecosystem is key to Vertex’s growth opportunity with over 17,000 S/4HANA customers globally.”
Overall, the stock commands a Strong Buy consensus rating based on 6 Buys and 2 Holds. The average Vertex price target of $27.67 implies 45.5% upside potential to current levels. Shares have lost 17% over the past year.