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On Tuesday, Argus Research adjusted its price target for Western Digital Corp (NASDAQ:WDC) shares, lowering it to $65 from the previous $88, while still upholding a Buy rating on the stock. The firm’s analyst cited ongoing supply chain issues as a challenge for the company. According to InvestingPro data, Western Digital, with a market capitalization of $15.57 billion, maintains a "GOOD" Financial Health score, and 15 analysts have recently revised their earnings estimates upward. The broader analyst consensus remains bullish, with price targets ranging from $38 to $100. Despite these hurdles, Western Digital has been focused on enhancing production efficiencies and adjusting to longer delivery times, which is anticipated to aid in cost management and margin improvement. The company’s efforts appear promising, with a current gross profit margin of 28.56% and trading at an attractive P/E ratio of 14.37x. InvestingPro has identified 8 additional key investment factors for Western Digital - unlock these insights and access comprehensive analysis with an InvestingPro subscription.
In contrast, the analyst maintained a Buy rating on General Dynamics Corp. (NYSE:GD), commending its standing as a leader in the Aerospace & Defense sector, a vital part of the U.S. economy. The company has faced supply chain difficulties since the pandemic, leading to component delays from suppliers and subsequent productivity issues that have affected its margins. However, management’s strategies for mitigating these challenges are expected to have a positive impact on costs and margins.
General Dynamics has seen a recent uptick in orders and a sustained demand for its commercial aircraft, supported by a strong backlog driven by global geopolitical tensions. The certification of the G800 by the FAA is projected to boost demand and margins in the latter half of 2025. Additionally, as supply chain issues recede, management anticipates margin expansion could reach between 600 to 700 basis points. This is expected to contribute to significant improvements in 2025, with earnings growth outpacing revenue.
On the topic of tariffs, General Dynamics’ management acknowledged the potential risks in the aerospace segment due to its substantial export volume. While the financial impacts remain uncertain, the company showcased its confidence through a 6% dividend increase and the repurchase of $0.6 billion in stock this quarter.
Trading at approximately 18 times Argus’s 2025 EPS estimate, General Dynamics’ shares are considered attractively priced when compared to the five-year average P/E range of 14-19 and against its peers on both P/E and price/sales ratios. The research firm has raised its target price for General Dynamics to $295 from the previous $280, reflecting expectations of heightened demand and supply chain improvements. For deeper insights into both companies’ valuations and comprehensive financial analysis, explore the Pro Research Reports available on InvestingPro, covering over 1,400 top US stocks with expert analysis and actionable intelligence.
In other recent news, Western Digital Corporation has reported impressive financial results for its third fiscal quarter, significantly surpassing analysts’ expectations. The company announced earnings per share (EPS) of $1.36, well above the forecasted $0.79, and revenue of $2.3 billion, marking a 31% year-over-year increase. Western Digital has also provided guidance for the upcoming quarter, projecting revenues of $2.45 billion and an EPS of $1.45, both figures exceeding estimates from firms like BofA Securities. Meanwhile, Western Digital’s strategic focus on the AI sector and data centers has led to analyst upgrades and increased price targets. Rosenblatt Securities raised its target price for the company’s stock to $53, maintaining a Buy rating, while BofA Securities increased its target to $62. JPMorgan upgraded the stock from Neutral to Overweight, setting a target price of $57, following the company’s separation of its NAND flash business. Western Digital’s management has expressed confidence in its business outlook by initiating a modest dividend, reinforcing a positive outlook amidst global uncertainties.
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