Analysts Still Bullish On Western Digital

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Western Digital Corp WDC released its earnings report Tuesday.

Analysts were still largely bullish on the stock as the company beat expectations, but saw net income fall.

Below are analysts comments on the company along with current ratings and price targets.

Deutsche Bank - Buy, $118 price target

"WDC's F1Q-15 results beat expectations, and were above the high end of guidance. Management saw strength across the board, with particular upside in notebook PCs, capacity enterprise, and SSDs, while performance enterprise was stable. WDC guided F2Q-15 conservatively, and expects industry demand to moderate Q/Q in PCs and gaming, while capacity enterprise and branded are expected to remain strong. We continue to view HDD companies as well positioned to benefit from data growth and view WDC's current valuation as attractive."

FBN - Sector Perform, $100 price target

"We retain our Sector Perform rating on WDC and $100PT on WDC. The company reported FQ1 revenue and EPS above consensus even as it lost 1.8 percent of HDD share and it lost share in each HDD segment. WDC lost 2.3 percent of enterprise share, 1.5 percent of mobile HDD share, and .8 percent of desktop share compared to CQ2 2014. This suggests that WDC deliberately chose to emphasize pricing over units."

Barclays - Overweight, $117 price target

"We still believe WD has the capacity to maintain and even accelerate its shareholder return initiatives over the next three years. Also we see potential for cost benefits as it integrates acquisitions - but not until FY16-17. Guidance seems conservative given pricing trends and progress in SSD's. We cut near-term estimates but believe shares should benefit from shareholder return and cost cutting long term."

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Stifel - Buy, $120 price target

"While we would view Western Digital’s F1Q15 results and F2Q15 guidance as offering up few surprises (e.g., company continues to deliver consistent execution), we would positively view the company’s forward high-capacity enterprise (i.e., Cloud) demand / visibility commentary – highlighting expectations for a continued recovery in demand into the 1HC2015. We believe Western Digital remains well positioned in this market, as the company highlighted strong momentum in its 6TB and 8TB helium drives (10TB drive in sampling) during the September quarter."

Pacific Crest - Buy, $116 price target

"We are modeling relatively flat margins for Western Digital for the next seven quarters. But we believe a mix shift toward higher-margin enterprise and branded drives should lead to higher margins for WD. We believe margins could be up about 100 basis points over the next four to six quarters, and 100 basis points of margin improvement adds $0.60 to EPS in our model. Also, enterprise SSD revenue grew 38 percent q/q and WD expects enterprise SSD revenue to grow higher than market growth of 25 percent y/y, which will be upside to our estimates."

Citi - Buy, $110 price target

"3CQ results were modestly better than expected, but WDC shares are down 2 % after-market as guidance, both on revs and EPS, was below consensus. We remind that the company tends to guide conservatively, and our base case calculation suggests that WDC should meet or beat the current street estimates of $3.9B revenues and $2.19 EPS. Overall, we remain bullish on WDC shares on a pick - up in enterprise demand, while outlook for PCs remain stable. We also note the potential EPS benefit from a MOFCOM approval (to fully integrate HGST) which remains a significant catalyst for the stock. We remain Buyers of WDC with a new target of $110 (from $116) based on slightly lower estimates."

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Posted In: Analyst ColorAnalyst RatingsBarclaysCitiDeutsche BankFBNPacific CrestStifel
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