On Wednesday, Western Digital Corp. (NASDAQ:WDC) received a boost from BofA Securities with an increased price target to $85 from the previous $75, while the firm sustained its Buy rating on the stock.
The adjustment follows Western Digital's positive preannouncement at a competitor's conference in early March, where the company indicated that both its Hard Disk Drive (HDD) and NAND businesses performed better than expected in terms of profitability. Consequently, earnings per share (EPS) are anticipated to surpass the earlier guidance range.
The company's management provided an upbeat outlook for the fiscal third quarter (March quarter), leading to a revision of revenue and EPS estimates. BofA Securities now projects Western Digital's revenue and EPS for the quarter to be $3.4 billion and $0.26, respectively. These figures are higher than the consensus estimates on the Street, which stand at $3.35 billion for revenue and $0.17 for EPS, and also exceed the company's prior guidance of $3.20-3.40 billion in revenue and $(0.10)-$0.20 in EPS.
BofA Securities reaffirmed its positive stance on Western Digital, citing the nearing cyclical bottom for both the HDD and NAND segments. The firm's optimism is also tied to the potential for enhanced shareholder value, as Western Digital remains on course to separate its HDD and NAND businesses in the second half of 2024. This strategic move is expected to further strengthen the company's market position and financial performance.
InvestingPro Insights
Western Digital Corp. (NASDAQ:WDC) has recently garnered attention with its upward revision in earnings and a positive preannouncement that has led to increased price targets from analysts. In line with these developments, InvestingPro insights provide a deeper look into the company's financial health and market performance. With a market capitalization of $23.2 billion, Western Digital is recognized as a prominent player in the Technology Hardware, Storage & Peripherals industry. Despite challenges, the company has shown a high return over the last year, with a 102.53% price total return, indicating strong investor confidence and market performance.
Nevertheless, the company’s financials reflect some areas of concern, with a negative P/E ratio of -9.79 and a gross profit margin of 8.29%, which highlights its weak gross profit margins. Additionally, the company has not been profitable over the last twelve months, and analysts do not expect profitability this year. This is juxtaposed with the stock's volatility and significant price upticks over the last six months, which may interest investors looking for dynamic market movements.
For those seeking to delve further into Western Digital's performance and future outlook, there are additional InvestingPro Tips available. Currently, there are 7 analysts who have revised their earnings upwards for the upcoming period, reflecting potential optimism in the company’s future earnings capacity. Moreover, investors should be aware that Western Digital does not pay dividends, which could influence investment decisions depending on individual strategies and income preferences.
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