Western Digital Analyst On Toshiba Deal: It's Not About Price Anymore - It's About Culture

BTIG analyst Edward Parker believes Western Digital Corp's WDC story is no longer price about, it is about culture.

“While much of the daily drama seems moot if WD successfully wins injunctive relief to maintain the status quo, i.e. stop Toshiba’s [Toshiba Corp (USA) TOSYY] sale process, during (today’s) hearing, what’s becoming [clearer] is that this is no longer about price. It’s about culture. And while Toshiba may fight tooth and nail to prevent anyone from rocking the boat, maybe that’s what this industry needs most,” Parker wrote (see his track record here).

He maintains his Buy rating with a $120 price target.

Notable Takeaways

• While the legal battle between Western Digital and Toshiba is ongoing, “it now sounds like Toshiba has walked back a bit by entertaining bids once again,” Parker noted.
• Parker believes this battle has shown both companies are focused on their culture and not asset value. “Toshiba’s very public refusal to work within covenants laid out in the JV suggest that a lot more may be at stake than a couple of billions of dollars of upside,” Parker said.
• While Toshiba investors may prefer a smooth sailing, Parker believes it may not be such a terrible thing for both companies to be fighting a little more aggressively and being smarter with their money.
• Western Digital’s memory fundamentals remain very strong, and Parker does not see this changing anytime soon.

Western Digital has a hearing Friday on its preliminary injunction against Toshiba.

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