Western Digital And Toshiba: The Settlement And The Guidance, Explained
Western Digital Corp (NASDAQ: WDC) settled its outstanding litigation and disputes Tuesday with Toshiba Corp that could have blocked the latter’s $18-billion sale of its chip unit.
But Western Digital’s concession was not a loss, according to KeyBanc Capital Markets.
The Rating
KeyBanc analyst Weston Twigg reiterated a Sector Weight rating on Western Digital with a $91 price target.
The Thesis
Under the settlement, Toshiba can sell its assets to the Bain Capital consortium, which includes Apple Inc. (NASDAQ: AAPL) and Seagate Technology PLC (NASDAQ: STX), but Toshiba Memory Corp. cannot share its internet protocol, Twigg said in a Tuesday note. (See Twigg's track record here.)
The terms — including prioritization of the joint venture over company investments, cooperation of the operating teams, a commitment to invest evenly in future ventures and the extension of Flash Alliance and Flash Forward agreements — are seen to serve Western Digital well.
“Overall, this is a positive event for WDC, as it removes a major overhang regarding access to future NAND capacity,” the analyst said.
Western Digital raised its second-quarter guidance on resulting NAND pricing, boosting earnings per share from a $3.60 to $3.70 range to $3.80 and revenue from between $5.2 billion and $5.3 billion to a new midpoint of $5.3 billion.
Price Action
At the time of publication, Western Digital was set to open up 3.6 percent at $84.75.
Related Links:
A Word In Defense Of Western Digital
Using Apple As An Indicator For The Memory Market
Latest Ratings for WDC
Date | Firm | Action | From | To |
---|---|---|---|---|
Dec 2020 | Rosenblatt | Maintains | Neutral | |
Sep 2020 | Cleveland Research | Upgrades | Underperform | Neutral |
Sep 2020 | Craig-Hallum | Upgrades | Hold | Buy |
View More Analyst Ratings for WDC
View the Latest Analyst Ratings
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Posted-In: Daniel Baksht KeyBanc Capital Markets toshiba Toshiba CorpAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga