WDC stock rose in pre-market trade on January 31, 2020, a day after the company reported an earnings beat and lots of analysts bullish actions in the stock.
Western Digital Corp. (Nasdaq: WDC) reported for its second fiscal quarter ended January 3, 2020. Western Digital reported Q2 adjusted EPS of 62c versus the consensus estimate of 58c. The company reported Q2 revenue of $4.2B versus the consensus estimate of $4.22B. Western Digital sees Q3 adjusted EPS of 85c-$1.05, versus consensus estimates of 73c. The company forecasts Q3 revenue of $4.1B-$4.3B versus the consensus estimate of $4.06B.
“The December quarter results reflect strong execution in our product roadmap, success in increasing our hard drive gross margin, and an improving flash market,” said Steve Milligan, chief executive officer, Western Digital. “We expect an accelerated recovery in our flash gross margins, which coupled with ongoing strength in demand for both hard drives and flash, positions us well for continued profitable growth in calendar year 2020.”
Deutsche Bank analyst Sidney Ho raised his price target for Western Digital to $85 from $80 saying the company reported strong results and is now expecting an acceleration in flash gross margins in the first half of 2020. Sidney thinks strong demand and rising flash pricing provides upside potential for Western Digital through 2020. He keeps a Buy rating on the shares.
BTIG analyst Edward Parker raised his price target on Western Digital to $80 and kept his Buy rating after its in-line Q2 results and better than expected guidance, which “proves” the supply-demand recovery narrative in NAND memory. Edward cites the management’s forecast of accelerating flash gross margins and “solid” fundamentals in its HDD business, noting that the improving end-market demand is “nicely synched” with the company’s product positioning.
Cowen analyst Karl Ackerman said there was not much to dislike with Western Digital’s Q2 report. The analyst said its result suggest the exit of a downturn and the entry of a recovery as demand fundamentals appear to be improving. He noted the company’s execution int its core enterprise HDD business and said its remains one of his top three picks. Ackerman reiterated his Outperform rating and $88 price target on Western Digital shares.
Longbow analyst Nikolay Todorov raised his price target on Western Digital shares to $88 from $80 after the company confirmed data center customers are driving better than anticipated demand and pockets of tightness in SSD have started to emerge. The company guided to March quarter sales that are 5% above consensus and its “EPS guide was even more impressive,” said Todorov, who keeps a Buy rating on Western Digital shares.
Wedbush analyst Matt Bryson raised his price target for Western Digital to $86 from $83 and reiterated an Outperform rating after the company modestly exceeded prior guidance as the realization of cost savings from manufacturing rationalization benefited HDD margins and NAND bit shipments grew more than he anticipated. Bryson tells investors in a research note he believes this is the initial innings of a flash cycle that should yield increasing NAND ASPs and gross margins for Western Digital through most, if not all, of CY20.
Benchmark analyst Mark Miller upgraded Western Digital to Hold from Sell following the company’s better than expected Q2 results and guidance, noting that the company sees NAND non-GAAP margins returning to a mid-to-high 30% range as the year ends and he has adjusted his model accordingly. However, he still expresses caution about cyclical effects impacting data center spending and hard drive sales in the second half of the year.
Mizuho analyst Vijay Rakesh raised his price target for Western Digital to $80 from $75 saying the company reported in-line December quarter results and guided to a “strong” March quarter. Western Digital in 2020 sees NAND undersupply, with gross margins improving from ~19% currently to 35%-40% exiting 2020, Rakesh tells investors in a post-earnings research note. He increased his estimates and reiterates a Buy rating on the shares.