UPDATE: Benchmark Company Downgrades STEC to Sell, Reiterates $4.50 PT Following Western Digital Purchase Announcement

In a report published Monday, Benchmark Company analyst Gary Mobley downgraded the rating on STEC STEC from Hold to Sell, but reiterated the $4.50 price target. In the report, Benchmark Company noted, “In a move that is not entirely surprising, Western Digital announced the intent to acquire STEC, Inc. (STEC – Hold rated) for $6.85/share (91% premium to Friday's close). This transaction is not entirely surprising given that STEC's management/Board was dealing with an adversarial proxy fight and given that STEC has been struggling with a new business model which aimed to sell the company's SSDs through both direct sales efforts as well as through OEM partnerships. It is the latter go-to-market strategy that Western Digital is better equipped to bring to fruition given that STEC's has seemingly lost credibility with storage OEMs such as EMC, HDS, IBM and others. We believe STEC has been shopped around to the usual buyers (e.g. STX, etc.), and we believe it is unlikely STEC will receive a higher offer. Therefore, we are moving to a ‘Sell' rating.” STEC closed on Friday at $6.73.