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Channel Checks Suggest Western Digital's Favorable Demand Trends Likely To Continue

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Western Digital Corp (NASDAQ: WDC) is scheduled to report its FQ1 2017 results on October 26. The company’s performance is likely to have been boosted by improved HDD demand and positive NAND pricing, Deutsche Bank’s Sherri Scribner said in a report. She maintained a Buy rating on the company, with a price target of $68.

Upside To Positive Preannouncement

While Western Digital has already made a positive preannouncement of its FQ1 results, checks indicate that HDD demand exiting the quarter was even stronger than was anticipated. Analyst Scribner added that the company is likely to have gained share in the HDD market.

Checks suggest that the favorable SDD demand trends continued through the end of the quarter. “NAND demand remains healthy on the back of higher smartphone configurations, and supply remains tight as technology transitions continue, all supportive of positive pricing,” Scribner wrote.

The analyst estimated HDD TAM in the 112-113 million range, with Western Digital having a share of about 42 percent.

Positives to Continue

“We think WDC’s numbers will continue to be strong through year-end, supported by healthy NAND pricing and stabilizing HDD demand. We also expect WDC to outperform cost-cutting and synergy plans over the next 4 quarters,” Scribner commented. The EPS estimate for FY17 has been raised from $4.55 to $4.65.

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Latest Ratings for WDC

Jun 2017Evercore ISI GroupInitiates Coverage OnOutperform
Jun 2017Aegis CapitalInitiates Coverage OnBuy
May 2017JefferiesDowngradesBuyHold

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