On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Western Digital Corp (NASDAQ:WDC) shares by reducing the price target from $90.00 to $82.00, yet reaffirmed an Outperform rating on the stock.
"We are modestly lowering WDC 1H estimates with NAND softness commentary from WDC and post MU earnings," the firm said.
The research firm noted that Western Digital has completed its Form 10 filing, which is a significant step toward the anticipated late January 2025 timeline for the potential spinoff of the company.
According to Mizuho, there are several outcomes to consider from the spinoff. First, they project that a standalone Western Digital HDD business could be valued at $75 per share, or approximately $27 billion, marking a roughly 19% premium compared to recent trading prices around $63. Secondly, the standalone SanDisk entity could be valued at $20 per share, or about $7.1 billion, which represents approximately 0.5 times enterprise value to sales (EV/S). This valuation contrasts with the current implied negative valuation of around 1 times EV/S.
Mizuho's analysis suggests a combined spinout valuation of around $95 per share, with the HDD business (RemainCo) contributing about $75 and the NAND business (SanDisk) adding roughly $20, compared to the stock's current price of approximately $63.
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