According to the research report released by Wells Fargo & Co, Western Digital (WDC.US) has been included in its Tactical Ideas list for the third quarter of 2024, and given a "shareholding" rating with a target price of $95.

A stock analyst for Wells Fargo & Co, Aaron Rakers, stated in a report that "Western Digital is moving towards the direction of separating its flash and hard disk drive (HDD) businesses into two independent listed companies. Prior to the separation, Western Digital will hold an analyst day after submitting an application to the US Securities and Exchange Commission. We expect this to be a positive catalyst as the company may provide detailed information and plans for independent operation model and capital/assets structure for the two companies."

In October of last year, Western Digital announced the separation plan and expected the transaction to be finalized sometime in the second half of 2024.

Rakers added, "We are increasingly confident that Western Digital has the ability to restore the HDD gross margin to a long-term range of over 35%. With the accelerating recovery of nearline hard disk drive products, and the industry's attention to the investment return rate for reasonable prices of nearline hard disk drives accepted by large-scale manufacturers, gross margin may exceed this target in 4-6 quarters."

Western Digital CEO David Goeckeler stated, "Once the separation is completed, both companies will have strategic focus and resources to seek exciting opportunities in their respective markets. The flash business offers exciting possibilities with market growth potential and disruptive new storage technologies."

Wells Fargo & Co pointed out that Western Digital's competitor Seagate Technology (STX.US) has started to gain attraction with its heat-assisted magnetic recording-based nearline hard disk drives.