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SanDisk Acquisition Likely Led To Western Digital Guidance Raise

SanDisk Acquisition Likely Led To Western Digital Guidance Raise

Western Digital Corp (NASDAQ: WDC) raised its fiscal fourth-quarter guidance and announced its chief strategy office would be assuming the role of CFO in September 2016.

Argus’ Jim Kelleher reiterated a Buy rating on the company, with a price target of $60.

Guidance Raised

“Western Digital has raised its fiscal fourth-quarter guidance, likely reflecting better NAND trends at the recently acquired SanDisk as well as a cyclical bump in the structurally declining HDD industry,” Kelleher mentioned.

The company announced its preliminary revenue for fiscal 4Q16 at $3.46 billion, above the high end of the guidance that had been issued after the closing on the SanDisk Corporation (NASDAQ: SNDK) acquisition.

Western Digital also expects its non-GAAP EPS for the quarter to come in above the high end of the earlier guidance range.

Related Link: Brean Capital Sees 130% Upside For Western Digital, At Street High

In addition, Chief Strategy Officer Mark Long is to assume the role of CFO, since Western Digital’s finance and strategy arms work in close cooperation.

“CEO Steve Milligan noted that WDC is going through a strategic and organizational transformation as the company integrates its two HDD businesses, WD and HGST, and the recently acquired SanDisk business,” according to the Argus report.

Impact Of The SanDisk Acquisition

Kelleher believes with the SanDisk acquisition, Western Digital has created a more sustainable business model.

Along with the continued robust cash flows from Western Digital’s legacy HDD business, the analyst believes the company is “now positioned to participate in growth markets from data center to cloud host to mobility.”

Since the HDD business is faced with various cyclical and structural challenges, the SanDisk acquisition is likely to offer a clear path forward for Western Digital as an integrated supplier of memory solutions.

Latest Ratings for WDC

Jan 2019Evercore ISI GroupDowngradesIn-LineUnderperform
Dec 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Dec 2018Craig-HallumUpgradesHoldBuy

View More Analyst Ratings for WDC
View the Latest Analyst Ratings

Posted-In: Argus Jim KelleherAnalyst Color News Guidance Reiteration M&A Analyst Ratings Best of Benzinga


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