Veritas Software Corp. (Nasdaq: VRTS) received a thumbs up from analysts Tuesday following the completion of the company's cash and stock deal that privatized Seagate Technology.
Share of the storage management software maker inched up 25 cents to 106.25 early in the session.
In a $12.1 billion deal that closed Nov. 22, Veritas consolidated its outstanding equity, buying back the 33 percent share held by Seagate, in addition to buying the hard disk drive maker. Veritas then sold Seagate's core operations to venture capital firm Silver Lake Ventures and Seagate management, in a move to privatize the former NYSE listing.
In a release Monday, Veritas said that completed deal will boost 2001 earnings per share by 7 to 8 percent. The transaction reduced the amount of Veritas shares outstanding by 18.7 million and will cut the company's pro forma tax rate to 34 percent from 36 percent in 2001.
Veritas also raised 2001 earnings guidance to 83 or 84 cents per share, up from 78 cents per share.
Analysts were bullish on the news.
A.G. Edwards analyst Shebly Seyrafi bumped up Veritas' rating to "buy' from "accumulate", citing a strong company outlook, the completion of the Seagate deal, and the cut in tax levels as reasons. The analyst maintained a $175 price target on the stock.
Dain Rauscher Wessels, following the company's lead, raised its 2001 earnings per share forecast for Veritas to 85 cents from 79 cents. Veritas received a "buy-aggressive" rating with a price target of $150.
S.G. Cowen analyst Drew Brosseau maintained a "strong buy" rating on the stock with a price target of $105, while raising 2001 EPS estimate from 80 to 86 cents.
Laura Lederman at William Blair & Company maintained her "long-term buy" rating but raised valuation concerns as a possible cause of volatility.
Reuters contributed to this report.