On Tuesday, Susquehanna maintained a Neutral rating on Western Digital Corp. (NASDAQ:WDC) but increased the shares target to $88.00 from the previous $80.00. The firm's decision reflects a positive outlook on the NAND industry's structural changes, which are anticipated to enhance the economics of NAND production.
Western Digital Corp. has been actively arguing that these industry shifts will be beneficial. This perspective aligns with insights from a June 4 investor call with SK Hynix, which indicated a gradual upgrade of lagging edge NAND capacity to ensure improved economics. Susquehanna's revised price target is also influenced by Western Digital's momentum in high-capacity, nearline (NL) focused Hard Disk Drive (HDD) offerings.
Susquehanna's updated estimates, which are above consensus, take into account a stronger NAND Average Selling Price (ASP) and Western Digital's strategic positioning. The firm's analysis suggests confidence in the company's ability to capitalize on the current market dynamics.
The increased price target to $88.00 is intended to reflect the expected long-term benefits from the evolving NAND sector. With these adjustments, Susquehanna's stance on Western Digital indicates a recognition of the company's potential in a changing market while maintaining a cautious outlook as reflected in the Neutral rating.
In other recent news, Western Digital Corp. has been the subject of several recent developments. Notably, the company reported strong financial results for the third quarter of fiscal year 2024, with revenue reaching $3.5 billion and non-GAAP earnings per share of $0.63, surpassing market expectations. The company also anticipates Q4 revenue to be between $3.6 billion and $3.8 billion, highlighting growth in both the HDD and flash segments.
In terms of analysts' perspective, Mizuho maintained a Buy rating on Western Digital and raised the price target to $90. The firm's analyst cited the potential value from the company's NAND spinoff and favorable pricing trends as key drivers. The firm also increased its fiscal year 2025 revenue and earnings per share estimates for Western Digital.
Another leading financial services firm also issued a Buy rating for Western Digital, setting the price target at $90. The firm highlighted Western Digital's dual exposure to HDD and SSD markets as a significant advantage. These recent developments indicate a positive outlook for Western Digital, driven by strong financial performance and strategic business decisions.
InvestingPro Insights
Western Digital Corp. (NASDAQ:WDC) is currently navigating a challenging landscape, as reflected in real-time data from InvestingPro. With a market capitalization of $25.18 billion, the company faces headwinds with a negative P/E ratio of -15.28, indicating that investors are concerned about profitability. Additionally, the company's revenue has seen a decline of nearly 16% over the last twelve months as of Q3 2024, underscoring the competitive pressures in the Technology Hardware, Storage & Peripherals industry.
Despite these challenges, Western Digital has shown a remarkable return over the last year, with a price total return of 93.82%. This performance is in line with the positive momentum identified by Susquehanna, particularly in the company's high-capacity HDD offerings. Moreover, Western Digital's liquid assets surpass its short-term obligations, which may provide some financial flexibility in the near term.
InvestingPro Tips highlight that Western Digital is a prominent player in its industry, yet analysts do not anticipate the company will be profitable this year. The company's recent trading near its 52-week high suggests investor optimism, potentially driven by structural changes in the NAND industry and strategic positioning. For those interested in deeper analysis and additional insights, there are 10 more InvestingPro Tips available on Western Digital, which can be accessed with a subscription. To enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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