Your Storage Space Earnings Playbook

Citi released an earnings preview of various storage companies amid a weak PC market eating in to HDD sales and the market is shifting to SSDs.

Following is a brief preview from Citi analyst Stanley Kovler on various companies operating in the storage space.

Arista Networks Inc (NYSE: ANET): Buy, $75 PT

"We expect ANET to post in-line or better results on revenue of $237 million, down 3.3 percent q/q, up 32.5 percent y/y, in-line with the Street consensus, and at the midpoint of guidance ($232–240 million)."

The analyst said the results would be likely beriven by Tomahawk-based data center switch upgrades by "Webscale customers that we expect to continue in to 2H led by new 7500R spine upgrades to 100Gbps spines."

"We model Q1 EPS of $0.61, down 24 percent q/q, up 21 percent y/y and in-line with Street consensus on gross margin of 63.6 percent, down 40 bps q/q, 150 bps y/y, 50 bps below Street consensus, and midpoint of guidance (62 percent – 65 percent)."

Related Link: Failed Merger Could Push SanDisk-Western Digital Down 25%

Infinera Corp. (NASDAQ: INFN): Buy, $20 PT

"We expect Infinera to report in-line Q1'16 results on revenue of $245 million, down 6 percent q/q, up 31 percent y/y, in-line with the Street consensus, and at the midpoint of guidance ($240 million – $250 million), marking the first 'seasonal' Q1 in 2 years as the Long-Haul upgrades Infinera has benefitted from are winding down."

"We are modeling EPS of $0.17, down 21 percent q/q, up 8 percent y/y, in-line with the Street consensus and at the midpoint of guidance ($0.15–$0.19)."

"[R]esults driven by continued demand by Webscale customers, slight growing Metro and DCI markets, and new product cycles, but offset by telco capex seasonality and declining operating margins on increased R&D spending."

Western Digital Corp (NASDAQ: WDC): Buy, $60 PT

"We believe WDC will report in-line FQ3'16 results, as we are modeling total revenue of $2,856 million, down 14 percent q/q, 20 percent y/y below Street consensus of $2,886 million, and around the midpoint of guidance ($2,800–2,900) as a soft PC market and the migration to SSDs continues."

"We anticipate EPS of $1.28, down 20 percent q/q, 32 percent y/y, below Street of $1.29 and toward the high end of guidance ($1.20–$1.30)."

SanDisk Corporation (NASDAQ: SNDK): Neutral, $77.50 PT

This is likely to be the last quarter where Sandisk reports as a standalone company as the Western Digital acquisition of Sandisk is tracking to a calendar second quarter close.

"We expect Sandisk will report total revenue of $1,231 million, down 20 percent q/q, 8 percent y/y, above Street consensus of $1,210 million and toward the high end of guidance ($1,175–1,250) based on our est. of a 10 percent q/q decline in bits shipped and ASPs down 8 percent q/q. We expect EPS of $0.57, down 55 percent q/q, 4 percent y/y, and above Street consensus of $0.55."

Related Link: UBS Cuts Seagate Outlook, Reiterates Sell And 33% Downside

Seagate Technology PLC (NASDAQ: STX): Sell, $27 PT

"We are raising our PT to $27 from $23, reflective of industry multiple expansion, and due to balanced risk around FQ3'16 (CQ1) results on gross margin upside potential. We also flow-through our 2017 / 2018 HDD mkt updates."

"We are modeling Seagate to report FQ3'16 revenue of $2,696 million, down 10 percent q/q, 19 percent y/y, just below Street consensus of $2,698 million, and in-line with guidance ($2,700 million). We model EPS of $0.60, down 26 percent q/q, 44 percent y/y, and below the Street consensus of $0.63."

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