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 of Citi analyst Stanley Kovler on various companies operating in the storage space: Arista Networks Inc

– Buy, $75 PT "We expect ANET to post in-line or better results on revenue of $237M, down 3.3% q/q, up 32.5% y/y, in-line with the Street consensus, and at the midpoint of guidance ($232-240M). The analyst said the results would be driven 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% q/q, up 21% y/y and in-line with Street consensus on gross margin of 63.6%, down 40 bps q/q, 150 bps y/y, 50 bps below Street consensus, and midpoint of guidance (62%-65%)." Infinera Corp.

– Buy, $20 PT "We expect Infinera to report in-line Q1'16 results on revenue of $245M, down 6% q/q, up 31% y/y, in-line with the Street consensus, and at the midpoint of guidance ($240M-$250M), 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% q/q, up 8% 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

– Buy, $60 PT "We believe WDC will report in-line FQ3'16 results, as we are modeling total revenue of $2,856M, down 14% q/q, 20% y/y below Street consensus of $2,886M, 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% q/q, 32% y/y, below Street of $1.29 and toward the high end of guidance ($1.20-$1.30)." SanDisk Corporation

– 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 $1,231M, down 20% q/q, 8% y/y, above Street consensus of $1,210M and toward the high end of guidance ($1,175-1,250) based on our est. of a 10% q/q decline in bits shipped and ASPs down 8% q/q. We expect EPS of $0.57, down 55% q/q, 4% y/y, and above Street consensus of $0.55." Seagate Technology PLC

– 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 $2,696M, down 10% q/q, 19% y/y, just below Street consensus of $2,698M, and in-line with guidance ($2,700M). We model EPS of $0.60, down 26% q/q, 44% y/y, and below the Street consensus of $0.63."