SanDisk Shares Lower Following Susquehanna Downgrade

Shares of SanDisk Corporation SNDK were trading down roughly 0.75 percent on Thursday afternoon after Susquehanna analysts led by Mehdi Hosseini downgraded their rating on the stock from Positive to Neutral. The experts also cut their price target from $85 to $79 to reflect their expectations that Western Digital Corp WDC will pay upon closing of its acquisition of the company.

Even though the company’s investment agreement with Unis fell through on the back of a longer-than-expected CFIUS review process, the deal for SanDisk is still on, as shareholders from both companies approved the transaction last week. Susquehanna analysts pointed out that China's MOFCOM is now the only regulatory approval outstanding before the deal can close. And, the experts ultimately think MOFCOM will approve the deal – even without the Unis investment.

Related Link: Failed Merger Could Push SanDisk-Western Digital Down 25%

In fact, they pointed out, Western Digitals other joint venture with Unis in China (Storage Systems) remains unchanged. This would provide Unis with the ability to distribute Western Digital’s products, and this provides the analysts with further “comfort in the prospect of MOFCOM approval.”

The firm estimates the total deal consideration will be around $79.10 per share for SanDisk, consisting of $67.50 per share in cash and about $11.60 per share in equity consideration. As such, given that Susquehanna’s “updated price target represents only ~2 percent upside from the current share price,” they decided to downgrade SanDisk's to Neutral.

Shares of SanDisk were down roughly 1 percent, while shares of Western Digital were trading down about 2.5 percent on Thursday afternoon.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.