Market Overview

Morgan Stanley Cuts Western Digital's Target From $53 To $48 Following Outlook

Share:
Morgan Stanley Cuts Western Digital's Target From $53 To $48 Following Outlook

Western Digital Corp (NASDAQ: WDC) updated its June quarter guidance broadly in-line with expectations. Morgan Stanley’s Katy L. Hubert maintained an Equal-weight rating for the company, while reducing the price target from $53 to $48. The analyst said that tighter supply of HDD and NAND would limit downside in the back half of the year.

Updated Guidance

Western Digital guided to revenue of $3.35B-$3.45B and EPS of $0.65 for the June quarter, taking into account the completion of the acquisition of SanDisk Corporation (NASDAQ: SNDK). This was marginally higher than the MS estimates of $3.3B and $0.52 for the combined entity.

Related Link: Western Digital Completes SanDisk Acquisition

Analyst Katy Hubert pointed out that tax rate is a benefit in the June quarter, which has driven the EPS forecast higher despite lower PBT. Going forward, the tax rate would be in the 20-25 percent range for FY17, 10-15 percent for FY18-23, and 7-10 percent thereafter. “This structure allows the company to efficiently access cash for debt paydown,” the analyst wrote.

Limited Downside In 2H

Management has not provided any guidance beyond the June quarter. It did mention, though, that NAND supply and some parts of HDDs could be tight. “Tighter supply can help offset higher Yen-based costs and increasing mix of lower margin 3D NAND in the second half of 2016. As a result, the company believes it can hold combined company gross margin relatively steady in the next several quarters,” Hubert stated.

Latest Ratings for WDC

DateFirmActionFromTo
Oct 2019UpgradesHoldBuy
Sep 2019MaintainsBuy
Sep 2019MaintainsSell

View More Analyst Ratings for WDC
View the Latest Analyst Ratings

Posted-In: Katy L. Hubert Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (SNDK + WDC)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
WEEDCantor FitzgeraldMaintains18.9
TGTXCantor FitzgeraldMaintains19.0
SPLKCleveland ResearchDowngrades
IQVWolfe ResearchUpgrades
PRAHWolfe ResearchUpgrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

AstraZeneca Remains Committed To Development Of ZS-9 Despite Letter From FDA

Barclays Not Worried About Palo Alto's Guidance Miss