Analyst Wamsi Mohan from Bank of America Securities reiterated a Buy rating on Western Digital (WDC – Research Report) and increased the price target to $85.00 from $75.00.
Wamsi Mohan’s rating is based on a blend of optimistic developments within Western Digital’s operations. The company has recently announced better-than-expected performance for both its Hard Disk Drive (HDD) and NAND flash memory segments, with profitability surpassing management’s initial forecasts. This positive momentum, coupled with expectations that both business units are nearing a cyclical trough, suggests a potential recovery that could enhance shareholder value. Additionally, the strategic plan to bifurcate the HDD and NAND divisions by the second half of 2024 is anticipated to unlock further value for investors.
From a financial perspective, Mohan expects a continued recovery in HDD pricing and volumes, driven by strong cloud storage demand and technological competitiveness in high-capacity storage solutions. The NAND segment is also projected to witness modest pricing improvements. However, there is an acknowledgment of potential risks, such as Western Digital’s product mix potentially limiting the upside from NAND pricing improvements relative to peers. Despite these concerns, the revised price objective reflects a higher earnings multiple due to confidence in the company’s pricing trends and margin expansion potential.
In another report released on April 10, Wells Fargo also maintained a Buy rating on the stock with a $95.00 price target.
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Western Digital (WDC) Company Description:
Western Digital Corp. engages in the development, manufacture, market and sale of data storage devices and solutions. It operates through the following product categories: client devices, data center devices and solutions, and client solutions. The client devices category includes mobile, desktop, gaming and digital video hard drives, solid state drives (SSDs), embedded products, and wafers. The data center devices and solutions category covers capacity and performance enterprise hard disk drives (HDDs), enterprise SSDs, data center software, and system solutions. The client solutions category offers removable products, hard drive content solutions, and flash content solutions. The company was founded by Alvin B. Phillips in 1970 and is headquartered in San Jose, CA.
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