FBR Capital Remains Sidelined on EMC Corporation Following Dell Merger Interest

In a research report released Thursday, FBR Capital analyst Daniel Ives reiterated a Market Perform rating on shares of EMC Corporation (NYSE:EMC) with a price target of $28, after the The Wall Street Journal reported that EMC and Dell are in talks to possibly merge both companies in what would be the biggest tech deal of all time at $50 billion+.

Ives said, “While there are many questions at this point (financing, deal complexity, potential spin off post deal), we believe many tech investors across the Street are currently scratching their heads trying to understand the merits of such a deal. In our opinion, it is crystal clear that after years of its “treadmill approach”, Joe Tucci and the EMC board have their backs against the wall as activist investor Elliott Management appears to have put enough heat in the kitchen to force this mature stalwart to figure out a strategic plan after years of struggles.”

“Of all the options potentially on the table, we would view a merger with the now private Dell as a “nightmare scenario” that would lack strategic synergies and further complicate EMC’s troubled growth path. While this merger makes a ton of sense for Dell as it transitions further into the enterprise landscape and away from its consumer roots, we believe EMC/VMware holders would still prefer a breakup of the antiquated Federated model and split,” the analyst added.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Daniel Ives has a total average return of 3.4% and a 50.3% success rate. Ives has a 3.3% average return when recommending EMC, and is ranked #955 out of 3772 analysts.

Out of the 27 analysts polled by TipRanks, 19 rate EMC Corporation stock a Buy, while 8 rate the stock a Hold. With a return potential of 10%, the stock’s consensus target price stands at $29.90.

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