Market Overview

Western Digital And Toshiba: The Settlement And The Guidance, Explained

Western Digital And Toshiba: The Settlement And The Guidance, Explained
Related WDC
8 Biggest Price Target Changes For Monday
71 Biggest Movers From Friday
Apple suppliers recover despite Qorvo guide cut (Seeking Alpha)

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

Oct 2018CitigroupMaintainsBuyBuy
Oct 2018Loop CapitalDowngradesBuyHold
Oct 2018BMO CapitalMaintainsMarket PerformMarket Perform

View More Analyst Ratings for WDC
View the Latest Analyst Ratings

Posted-In: Daniel Baksht KeyBanc Capital Markets toshiba Toshiba CorpAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


Related Articles (AAPL + STX)

View Comments and Join the Discussion!

Latest Ratings

ACBIKeefe Bruyette & WoodsUpgrades21.0
COTYBMO CapitalUpgrades12.0
VYGRRaymond JamesUpgrades0.0
ATNXJP MorganUpgrades15.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
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.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Benzinga's Top Upgrades, Downgrades For December 13, 2017

Digital Power Announces New Cryptocurrency Mining Division; Stock Surges