Wedbush Downgrades NetLogic (NETL) to Neutral; Broadcom To Acquire NETL for $50/Share
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Price: $26.72 +0.72%
Rating Summary:
4 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 19 | Down: 16 | New: 9
Rating Summary:
4 Buy, 12 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 19 | Down: 16 | New: 9
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Wedbush downgraded NetLogic (NASDAQ: NETL) from Outperform to Neutral, price target raised from $41 to $50.
Wedbush analyst says, "View premium as very favorable to NetLogic shareholders given challenging macro uncertainty. The $50 in cash per share acquisition price represents about a 57% premium to the prior trading day’s close (9/9/2011) of $31.91 and about 27.2x times our 2012 pro forma EPS estimate of $1.84 and 27.6x the Street estimate of $1.81. The 27x multiple is a significant premium to the Communications/Storage peer group average multiple of 11x 2012 EPS. We believe Broadcom’s (Nasdaq: BRCM) offer to pay $50 in cash per share is very favorable to NetLogic shareholders, given the challenging macro uncertainty."
"While we believe the $50 take out price is justified as (1) the inventory corrections are behind NetLogic, (2) transition to IPv6 is starting to take place, and (3) NetLogic’s robust Multicore Processors (MCPs) design win pipeline is strong, it is a considerable premium to the peer group. We believe, given the considerable premium, that a competitive bid is unlikely and recommend investors take advantage of the 80+% move in the stock versus the 2% in the S&P since its recent low and take profits."
For more ratings news on NetLogic click here and for the rating history of NetLogic click here.
Shares of NetLogic closed at $31.91 yesterday.
Wedbush analyst says, "View premium as very favorable to NetLogic shareholders given challenging macro uncertainty. The $50 in cash per share acquisition price represents about a 57% premium to the prior trading day’s close (9/9/2011) of $31.91 and about 27.2x times our 2012 pro forma EPS estimate of $1.84 and 27.6x the Street estimate of $1.81. The 27x multiple is a significant premium to the Communications/Storage peer group average multiple of 11x 2012 EPS. We believe Broadcom’s (Nasdaq: BRCM) offer to pay $50 in cash per share is very favorable to NetLogic shareholders, given the challenging macro uncertainty."
"While we believe the $50 take out price is justified as (1) the inventory corrections are behind NetLogic, (2) transition to IPv6 is starting to take place, and (3) NetLogic’s robust Multicore Processors (MCPs) design win pipeline is strong, it is a considerable premium to the peer group. We believe, given the considerable premium, that a competitive bid is unlikely and recommend investors take advantage of the 80+% move in the stock versus the 2% in the S&P since its recent low and take profits."
For more ratings news on NetLogic click here and for the rating history of NetLogic click here.
Shares of NetLogic closed at $31.91 yesterday.
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