Western Digital Poised for Growth: Buy Rating Backed by Strong HDD Recovery and NAND Segment Promise

Analyst Aaron Rakers of Wells Fargo maintained a Buy rating on Western Digital (WDC – Research Report), retaining the price target of $95.00.

Aaron Rakers has given his Buy rating due to a combination of factors that suggest a positive outlook for Western Digital. The company shows a strong recovery in its Nearline Hard Disk Drive (HDD) shipments, which significantly exceeded estimates, indicating robust demand. Additionally, Western Digital’s ramp up of 26/28TB UltraSMR technology is poised to further strengthen its market position. Rakers also notes Western Digital’s higher-than-expected gross margin (GM%) in HDD, reflecting efficient cost management and a clear trajectory towards achieving a GM% of 35% or higher, which is a positive sign for profitability.
Furthermore, Rakers sees potential in Western Digital’s NAND Flash segment, where average selling prices have risen quarter-over-quarter, contributing to a recovery in Flash GM%. The report also highlights the company’s promising enterprise Solid State Drive (eSSD) ramp up, driven by AI-fueled demand and the return of key cloud customers. With Western Digital’s guidance appearing conservative in light of these factors, and the industry outlook showing strong demand growth for NAND and continued recovery in cloud demand for HDD, Rakers maintains confidence in the company’s performance and recommends a Buy.

In another report released today, Barclays also maintained a Buy rating on the stock with a $80.00 price target.

WDC’s price has also changed dramatically for the past six months – from $42.180 to $69.440, which is a 64.63% increase.

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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.