UPDATE: Stifel Reiterates on Western Digital as Positive Thesis Continues

In a report published Friday, Stifel analyst Aaron Rakers reiterated a Buy rating on

, and raised the price target from $82.00 to $105.00. In the report, Stifel noted, “We maintain our Buy rating on shares of Western Digital and increase our target price to $105 (was $82); our new target price reflects 12.3x P/E & ~7.1x EV/EBITDA and a ~10% FCF yield on our C2015 estimates. While investors should, in our view, continue to question the sustainability of a +130M/qtr HDD ship TAM into 1H2014 and expect focus on SSDs/Flash vs. HDDs (we continue to emphasize Flash capacity supply vs. HDDs), the underlying capacity demand and favorable cloud-driven mix shift impacts, coupled with the industry's underlying financial model considerations (GM% consistency/upside potential vs. 27%-32% model, opex management, ROIC, FCF, and shareholder returns), we believe investor sentiment will remain positive on the HDD industry. We believe it is important to understand the transition in the HDD industry as storage capacity shifts from personal devices to the cloud, and thus shifts focus toward capacity shipped and the potential for HDD vendors to move into more of a cloud-driven solutions sales role over the long term.” Western Digital closed on Thursday at $82.10.