This Analyst Remains Bearish On Western Digital Despite 60%+ Slide

BlueFin’s John Donovan expects Western Digital Corp WDC to continue to witness volatility in the near term.

The analyst continued to maintain a negative stance on the stock, despite the share price having plunged over the past 15 months.

Near Term Concerns

Donovan expressed concern regarding PC challenges for Western Digital, stating that pressure was likely from both competitive adjustments and demand.

The analyst also mentioned pricing degradation continued to be “a major issue despite rumors to the contrary,” while the company’s HDD TAM was “contracting at an alarming rate.”

While near term “enterprise machinations” did not appear to be favoring Western Digital, SSDs could offer some hope, although Donovan cautioned that “playing catch up is challenging and VERY expensive.”

Capital Concerns

While appreciating the benefits of the merger with HGST, which would be completed once the MOFCOM ruling is finalized, Donovan expressed concern regarding the costs associated with the SanDisk Corporation SNDK deal.

“We have growing concerns regarding the capital required in the SSD/SNDK space given the movements of the market and the investments by leaders… and several China upstarts,” Donovan noted.

Despite the long-term potential of the SanDisk acquisition, the analyst believes there could be more “choppiness” in the near term for Western Digital.