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On Thursday, Rosenblatt Securities increased its price target on Western Digital Corporation (NASDAQ:WDC) shares from $50.00 to $53.00, while reaffirming a Buy rating. The adjustment follows Western Digital’s announcement of a record high Non-GAAP Gross Margin (GM) of 40.1% for its Hard Disk Drive (HDD) products. The company also reported a robust performance that surpassed Non-GAAP Earnings Per Share (EPS) expectations. InvestingPro data shows the stock has gained over 9% in the past week, with eight analysts recently revising their earnings estimates upward. According to InvestingPro’s Fair Value analysis, Western Digital currently appears undervalued.
The firm’s analysts noted that Western Digital entered the market with significant momentum, attributing the success to a combination of high HDD Non-GAAP GM and well-managed operating expenses. Looking ahead, the company has provided guidance for the June quarter, anticipating a 6.5% quarter-over-quarter revenue increase and a GM improvement to 40.5%. With current revenue at $15.61 billion and a P/E ratio of 13.35x, the company maintains a strong market position. For deeper insights into Western Digital’s financials and growth potential, InvestingPro offers comprehensive analysis through its detailed Pro Research Report, available for over 1,400 US stocks.
According to Rosenblatt, the current upswing in the HDD market is largely driven by demand from AI data centers. Western Digital’s management has expressed confidence in the business by initiating a modest dividend, signaling a positive outlook. The analysts believe that Western Digital’s strategy of reinvesting in the business, reducing debt, and returning cash to shareholders offers a relatively secure investment opportunity amidst global geopolitical uncertainties.
The firm’s endorsement is based on the expectation that Western Digital will continue to benefit from its exposure to the AI sector. In their commentary, Rosenblatt analysts stated, "We are lifting our estimates and 12-month target price to $53." This sentiment reflects the firm’s confidence in Western Digital’s financial strategy and market positioning.
In other recent news, Western Digital Corporation reported robust financial results for the third fiscal quarter, with earnings per share (EPS) of $1.36, significantly surpassing analyst expectations of $0.79. The company achieved revenues of $2.3 billion, a 31% increase year-over-year, although slightly below some forecasts. Western Digital has provided guidance for the fourth fiscal quarter, projecting revenues of $2.45 billion and an EPS of $1.45, which are above some analyst estimates. The company is also on track to ship over 1 million units of its CMR and UltraSMR drives in the upcoming quarter. BofA Securities raised its price target for Western Digital to $62, maintaining a Buy rating, citing the company’s strong performance and potential for gross margin improvement. JPMorgan also upgraded the stock to an Overweight rating with a new price target of $57, following the company’s separation of its NAND flash business. Western Digital continues to focus on advancing HDD technology, with strong demand from cloud and hyperscale customers driving its financial success.
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