UPDATE: Monness Crespi Hardt Downgrades Dell to Neutral on Valuation, Post LBO Speculation
Monness Crespi Hardt downgraded Dell (NASDAQ: DELL) from Buy to Neutral and removed its $13 price target.
Monness Crespi Hardt noted, "Bloomberg reported that Dell is in discussions with at least two private equity shops regarding a potential LBO. … The sheer size of the LBO may prove prohibitive given Dell's $21.4 bln market cap as of the close and a potential valuation of $22.7 bln (or $13/sh) applying a 20% standard premium to Friday's close. Michael Dell owns 15.7% of the company aiding the financing of a 15% or greater equity investment component. That being said, as of the end of October the company had a very healthy balance sheet with $14 bln in cash and investments (with 10-20% of cash in the U.S.) versus only $ 9 bln in ST and LT debt with a LT debt/capital ratio of only 34%, which would allow for significant debt financing."
Dell closed at $12.29 on Monday.
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