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On Tuesday, Citi analyst Asiya Merchant updated the price target for Western Digital Corp. (NASDAQ:WDC) shares, raising it from $60.45 to $64.00, while reiterating a Buy rating for the company. Merchant’s revised outlook follows the completion of the Sandisk flash spinout, prompting a reevaluation of Western Digital’s financial forecasts. The company, currently valued at $17.04 billion, has shown strong momentum with a 38.59% revenue growth in the last twelve months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations.
The adjustment of the price target to $64, down from a previously published target of $80, reflects the valuation of Western Digital’s remaining core Hard Disk Drive (HDD) business. The analyst cited a stable HDD market as a key factor supporting an improved earnings outlook for Western Digital.
In her analysis, Merchant compared Western Digital’s trading multiples with those of its competitor Seagate Technology (NASDAQ:STX), noting that Western Digital is trading at 2.12 times enterprise value to sales (EV/S) for the calendar year 2026 (CY26), while Seagate is trading at 2.6 times EV/S for the same period. This comparison suggests that Western Digital’s stock may be undervalued relative to its peer.
Moreover, Merchant anticipates that Western Digital will further reduce its net debt within the next 12 months. This expectation includes the planned sale of Western Digital’s 19.9% stake in Sandisk shares, which is likely to contribute to the company’s debt reduction strategy.
The maintenance of the Buy rating by Citi reflects confidence in Western Digital’s market position and its potential for growth, as the company continues to navigate the evolving technology landscape and capitalizes on its strategic initiatives.
In other recent news, Western Digital Corp. has reported significant developments following its spin-off of Sandisk Corp. The company received a credit rating upgrade from ’BB’ to ’BB+’ by S&P Global Ratings, reflecting expectations of post-spin deleveraging and conservative financial policies. Western Digital is set to receive approximately $600 million from Sandisk as part of the separation and plans to use this, along with free cash flow, to reduce its debt. Fitch Ratings also affirmed Western Digital’s Long-Term Issuer Default Rating at ’BB+’ and removed the company from its Rating Watch Negative list, highlighting a stable outlook and a robust product portfolio post-separation. Additionally, Cantor Fitzgerald has maintained its Overweight rating for Western Digital, with a price target of $95.00, citing confidence in the company’s new CEO and its strategic focus on growth and profitability. The company aims to achieve a net leverage of 1.0x-1.5x EBITDA and plans to resume dividends in the fourth quarter of fiscal year 2025. Sandisk, now independent, has revised its bylaws and is set to trade under a new ticker symbol, marking its strategic direction post-separation from Western Digital.
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