What Catalyst Can Boost Western Digital's Annual EPS By 5%?

JPMorgan on Monday issued a company note on Western Digital Corp WDC after the company announced the closing of its Japan manufacturing facility.

Analyst Rod Hall wrote, "WDC announced the closure of its head component front-end water facility in Odawara Japan...We calculate that this should boost annual EPS by around 5 percent assuming the $90m in employee termination costs represent about one year of salary."

Western Digital announced the closing of the facility in order to reduce manufacturing costs and analysts expect the deal to be completed by the end of the third quarter of 2016. JPMorgan believes this could be a catalyst that raises EPS by around 5 percent in 2016.

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On Monday, Western Digital acquired more than 100 patent assets from International Business Machines Corp. IBM. The intellectual property is expected drive further innovation and accelerate growth of the company.

"This agreement reflects our continued focus on innovation and sets the stage for even more rapid advancement and commercialization of new data storage solutions," said Mike Cordano, president and chief operating officer, Western Digital. "We are building on Western Digital and IBM's long-standing relationship and look forward to future collaborations and business opportunities."

Shares of Western Digital recently traded at $42.67, down 4.6 percent.