Brean Capital Remains Bullish as Western Digital (WDC) Votes on SNDK Deal

Brean Capital maintained a Buy rating on Western Digital Corp. (NASDAQ: WDC), and cut the price target to $120.00 (from $150.00), as shareholders are set to vote on the SNDK deal today. Brean Capital says that the deal could drive very attractive net income synergies and equity appreciation even under current deal economics.

Analyst Ananda Baruah commented, "With WDC shareholders set to vote the SNDK deal today, we believe there remains substantial appreciation potential for owning WDC, regardless of outcome (25% - 133% depending on purchasing shares ahead of or after deal close). This includes deal approval or denial, as well as deal re-pricing or original economics. Simply, we believe that 1) normalized fundamentals for both initial synergies (WDC controlled) and MOFCOM COGS benefits remain underappreciated and 2) valuation multiples remain depressed given #1, along with softer current demand, a general lack of visibility to strategic challenges / deal execution, and pivot in investment case for WDC shareholders. We understand the various nuanced philosophical views on each of these, and don’t argue their merit. That said, we believe that investors can “own the WDC trade” and ultimately figure out the various L-T wrinkles over the next 24 months, given our view that what WDC can control (Figure 1) provides an underappreciated punch. Our TP has been revised down to $120 from $150."

For an analyst ratings summary and ratings history on Western Digital Corp. click here. For more ratings news on Western Digital Corp. click here.

Shares of Western Digital Corp. closed at $48.19 yesterday.

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