Mizuho Upgrades Western Digital To Buy; Stock Up 3%

Mizuho’s Vijay Rakesh believes the near-term estimate reset for Western Digital Corp WDC, a seasonally better 2H for NAND and a modest HDD rebound in 2H could act as tailwinds for the second half of the year.

Rakesh upgraded the rating on the company from Neutral to Buy, while raising the price target from $40 to $53.

Weakness Expected

“While WDC should give more FY17E details on its July 1 call, we have modeled weaker 2H GMs, weaker Samsung licensing, and see a mostly in-line 2H16 which would be a big change from the significant downside of the last four quarters,” the analyst mentioned.

Related Link: Citi Sees Near-Term Fundamental Weakness In Western Digital

However, Rakesh pointed out that long-term challenges remain, with 3D-NAND delays leading to share losses on iPhone, MacAir and overall NAND share losses.

Although PC builds were weak in 1H, improving PC and server builds in 2H are likely to drive some degree of rebound in HDD units.

“We believe while core WDC still faces 10K/15K HDD challenges, the NAND market should see seasonal strength with iPhone/handset builds and 2H PC and SSD ramps,” Rakesh stated.

At Time Of Writing...

Western Digital was seen up 3.14 percent at $49.53.