The firm cut its price target to $70 from $86 on the stock.
Chinese investment company Unisplendor could go back on its agreement to buy a 15% stake in Western Digital (WDC) for $92.50 per share, CLSA wrote in a note, Barron's reports.
If the investment doesn't occur, Western Digital's planned acquisition of SanDisk could be threatened, the firm added, Barron's notes.
Should Unisplendor renege on the deal, the merger between SanDisk and Western Digital would require approval from Western Digital shareholders, which might not necessarily occur, CLSA continued.
"While we don't think WD can walk away from the SanDisk deal due to weakening fundamentals, we're more cautious on Unisplendour's investment in WD given the pull back in WD's share price.," CLSA stated, according to Barron's.
Western Digital stock closed at $42.47 today, and is down nearly 30% so far this year.
Based in Milpitas, CA, SanDisk provides flash storage solutions.
About 9.78 million shares of SanDisk were traded today, well above the company's average trading volume of roughly 2.55 million shares per day.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
SanDisk's strengths such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins are tempered by weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.
You can view the full analysis from the report here: SNDK
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.