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UPDATE: Bank of America Downgrades Western Digital; Lowers PO

According to a research report published this morning, Bank of America has downgraded Western Digital (NYSE: WDC) from Buy to Neutral, and lowered PO from $54 to $46.

In the report, Bank of America said, "WD reported significantly better than expected F3Q12 EPS at $2.52 vs. our/Street $1.60/1.55, driven by revenue and margin. WD guidance was disappointing (EPS of $2.35-2.55 vs. our/Street prior $2.67/2.30) and commentary pointed to softer demand than expected going forward, at current/elevated ASPs levels, and some pricing concessions (certain HGST customers, pre-acquisition). It appears the HDD industry can't have it both ways for much longer – pricing/margins at high levels, and expected strong demand, with assumed channel inventory refill. We step to the sidelines for now, despite attractive valuation."

Western Digital closed yesterday at $44.10.

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