Today’s Research Reports on Stocks to Watch: Broadcom and CA Inc.
It was a day of gains for CA Inc. but a day of big losses for Broadcom, one day after the companies announced that Broadcom would purchase CA Inc. for $18.9 billion. RBC Capital Markets analyst Amit Daryanani wrote, "Investors will wrestle and try to gain comfort in (the) strategic rationale and its impact to capital allocation." Evercore analysts wrote, “What the Hock?" We think investors will likely be disappointed at this deal, which seems more financial engineering/PE driven than due to any strategic rationale."
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Broadcom Inc. shares closed down nearly 14% on roughly 43.5 million shares traded yesterday. The stock plummeted to a new low of $197.46 as analysts showed confusion over the company’s announcement to acquire CA Technologies, one of the world’s leading providers of information technology (IT) management software and solutions. The stock saw losses as big as 19% making it the worst day of trading for the stock ever. Eric Schiffer, chief executive of the Patriarch Organization remarked, "It’s the most bizarre, defocused, non-strategic acquisition of the last decade." The stock also had at least two analysts downgrade it with others cutting their price targets. Brokerage B Riley cut their price target to $245. CEO Hock Tan said, "This transaction represents an important building block as we create one of the world’s leading infrastructure technology companies. With its sizeable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market, and its mainframe and enterprise software franchises will add to our portfolio of mission critical technology businesses. We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions.”
Access RDI’s Broadcom Inc. Research Report at:
CA, Inc. shares closed up almost 19% on Thursday with about 76 million shares traded. The stock hit a new high of $44.20 during intra-day trading as traders continued to absorb the news that Broadcom Inc. has agreed to buy the company for $18.9 billion on Wednesday. Broadcom will be paying $44.50 per share in cash for CA, which is a 20 percent premium to Wednesday’s closing price. CA Inc. CEO Mike Gregoire commented, "We are excited to have reached this definitive agreement with Broadcom. This combination aligns our expertise in software with Broadcom’s leadership in the semiconductor industry. The benefits of this agreement extend to our shareholders who will receive a significant and immediate premium for their shares, as well as our employees who will join an organization that shares our values of innovation, collaboration and engineering excellence. We look forward to completing the transaction and ensuring a smooth transition."
Access RDI’s CA, Inc. Research Report at:
Our Actionable Research on Broadcom Inc. (NASDAQ: AVGO) and CA, Inc. (NASDAQ: CA) can be downloaded free of charge at Research Driven Investing.
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