This Analyst Reaffirms Bearish Case For Western Digital After Taking Cue From Micron's Outlook

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  • Benchmark analyst Mark Miller maintained a Sell rating on Western Digital Corp WDC with a price target of $28.00
  • Rival Micron Technology, Inc MU reported that its outlook for the calendar year 2023 has weakened and lowered its forecast
  • For 2023, Micron expects its year-on-year bit supply growth to be harmful to DRAM and in the single-digit percentage range for NAND versus Western Digital's prior forecast of low-to-mid 20% NAND bit supply growth. 
  • As a result, Micron is reducing DRAM, and NAND wafer starts by approximately 20% versus the fiscal fourth quarter of 2022. 
  • Micron will make these reductions across all technology nodes. 
  • In addition, the firm is looking for additional capex cuts. 
  • As such, Miller again lowered his FY23 forecast for Western Digital. Concerns over a weaker-than-expected recovery and its associated drain on Western Digital's cash position led to the re-rating. 
  • Miller cut the FY23 forecast for Western Digital from non-GAAP earnings of $0.76 per diluted share on sales of $13.4 billion to non-GAAP earnings of $0.22 per diluted share on sales of $13.0 billion.
  • Last month, memory chip maker SK Hynix also offered a similar gloomy forecast for demand, citing deteriorating demand in the computer and corporate server markets.
  • Price Action: WDC shares traded lower by 0.33% at $36.30 on the last check Thursday.
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