Needham & Company Upgrades SanDisk (SNDK) to Buy; Sees 90% Chance of WDC Deal Closing
Needham & Company upgraded SanDisk (NASDAQ: SNDK) from Hold to Buy with a price target of $78.00 as they put the likelihood of a deal with WDC consummating at 90%+.
Analyst Rajvindra Gill commented, "We are upgrading SNDK to a Buy with a $78PT as we put the likelihood of a deal with WDC consummating at 90%+. According to our IT Hardware analyst, Rich Kugele, WDC remains upbeat, believing they can get it done in 2Q16 and receive shareholder approval with or without Unis. Recall there are two scenarios relating to the deal: 1) ~$86 per share if the Unis investment in WDC is approved ($85.10 in cash and 0.0176 shares of WDC stock); 2) if not approved (or terminated), WDC would pay $67.50 in cash plus 0.2387 shares, or ~$78 at current levels. At SNDK's current levels, the spread is 30% between the first scenario, and 18% for the lower cash, higher equity ratio scenario. Our $78 price target is based on a decision tree based on these two scenarios, plus a 10% chance the deal is not approved and SNDK's stock falls to $50."
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Shares of SanDisk closed at $67.25 yesterday.