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Why Western Digital Could Shatter All-Time Highs And Hit $150

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Why Western Digital Could Shatter All-Time Highs And Hit $150
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Western Digital Corp (NASDAQ: WDC) issued a press release on Wednesday, announcing its financial results for 4Q and fiscal 2015.

Western Digital reported June quarter revenue of $3.2 billion and net income of $220 million, or $0.94 per share, as compared to the year-ago figures of $3.7 billion in revenue and net income of $317 million, or $1.32 per share. The company generated revenue of $14.6 billion and net income of $1.5 billion, or $6.18 per share, for fiscal 2015. On a Non-GAAP basis, Western Digital's full-year net income came in at $1.8 billion or $7.76 per share.

In a report published Thursday, Brean Capital analyst Ananda Baruah maintained a Buy rating on Western Digital, with a price target of $150, after the company reported solid quarterly results despite a tough PC environment.

Analyst Ananda Baruah pointed out that Western Digital achieved the low-end of its original guidance range. "We continue to believe that in spite of softer-than-anticipated 1H15 PC environment that WDC's normalized EPS remains at least ~$7.00 before applying any benefit from MOFCOM, and $10.00 - $11.00 after applying a benefit," the analyst added.

In the report Brean Capital noted, "For the Sep Q, WDC is looking for TAM up ~5M Q/Q to 115M. WDC does believe that the PC supply chain is unusually drained ahead of Win 10 and Intel launches and there could be some inventory rebuild and a return of PC demand in Dec Q."

Western Digital announced that it had made good progress in its negotiations with MOFCOM and was expecting an announcement before the year-end. Baruah expects MOFCOM to add $60 in Western Digital's stock price.

An expected stabilization in the PC market towards the end of calendar year 2015 and continued healthy growth in the Enterprise market are expected to boost Western Digital's top line in the future.

Baruah believes that the company remains "extremely attractive," as its business model and TAM normalizes "from what was PC overbuild in 2H14 on the back of the Windows refresh." The analyst expects Western Digital to be at least a $120-$165 stock, representing 50-100 percent appreciation, "assuming they derive some MOFCOM benefit."

Latest Ratings for WDC

DateFirmActionFromTo
Jan 2017BMO CapitalUpgradesMarket PerformOutperform
Jan 2017GuggenheimInitiates Coverage OnBuy
Dec 2016Goldman SachsUpgradesSellNeutral

View More Analyst Ratings for WDC
View the Latest Analyst Ratings

Posted-In: Brean CapitalAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga

 

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