Brean Murray Discusses Dell, Compellent Takeunder (DELL)

Brean Murray Carret & Co. has a Buy rating and a $17 rice target on shares of Dell (NASDAQ: DELL) after the company acquired Compellent Technologies (NYSE: CML) yesterday.

In the note sent to clients, Brean Murray writes, "We believe Dell continues to maintain (and will generate) very attractive cash flow, and our Buy thesis remains unchanged. Dell's offer price represents ~6% of Dell's $12.9B cash ($4.13/share in net cash). However, we still believe that Dell can generate ~$5.2 - $5.5B in CY11 CFO, and we believe net/cash per share (all else equal) will move to $6.70/share by the end of CY11, vs. $3.67/share currently, if this deal is completed at this price.) This would imply Dell still trades at a very reasonable valuation of 4.5x P/E ex-net cash on our CY11 EPS even after this deal gets done."

Shares of DELL lost 54 cents yesterday to close at $13.35, a loss of nearly 4%.