EMC Downgraded To Neutral At Sterne Agee CRT

Alex Kurtz of Sterne Agee CRT expects the acquisition of EMC Corporation (NYSE: EMC) by Dell, worth $67 billion, to close on time, over the next two quarters.

Kurtz downgraded the rating on EMC to Neutral, while maintaining the price target at $28.

No Concerns For CY16

“We expect no material changes in sales coverage/quotas from EMC for the remainder of CY2016 and believe market concerns around EMC heavily discounting post-close may be overdone,” the analyst mentioned.

Kurtz expects CY2017 to be a more competitive year, with EMC integrating Dell hardware into its offerings.

Increased Pipeline Activity

“Our channel contacts have seen increased pipeline activity around EMC's Hyper Converged portfolio (ScaleIO and VxRail) over the last 2 quarters being driven by two key factors,” the analyst said.

Firstly, the large Nutanix transactions have led to some concerns that EMC might be at risk to losing share of Fortune 1000 type accounts, especially with the U.S. Federal markets.

Secondly, “within the Channel, because Nutanix and to a degree SimpliVity have over a year lead in the maturity of their platforms relative to VxRail - VARs are using this as a 'wedge' issue to further develop their Nutanix engineering resources and training,” according to the Sterne Agee CRT report.