What Happened: Shares of leading data storage manufacturer Western Digital (NASDAQ: NASDAQ:WDC) jumped 5.2% in the pre-market session after Morgan Stanley named the company a "Top Pick" replacing Nividia. The firm raised WDC's price target from $52 to $73. The new price target represents a potential 30% upside from where shared traded was when the upgrade was announced. It added, "The valuation disparity between Western Digital and peers is extremely compelling, particularly in light of the second-half separation of the memory business, which should unlock the sum of the parts values. Business is getting better at a rapid rate, and there are pluses and minuses to the NAND cycle."
Separately, major indices continued to rise after the S&P made an all-time high on Friday, 19 January 2024, above the previous highs set in January 2022. Tech stocks have outperformed since the second half of 2023 with expectations that the Fed will cut rates in 2024. Other than continued momentum from this dynamic, we haven't observed any other specific macro or economic developments to explain the market strength. After the initial pop the shares cooled down to $57.47, up 4.9% from previous close.
Is now the time to buy Western Digital? Find out by reading the original article on StockStory.
What is the market telling us: Western Digital's shares are quite volatile and over the last year have had 10 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago, when the company gained 5% after the stock earned a double rating upgrade from Wall Street analysts. Deutsche Bank analyst Sidney Ho upgraded the stock's rating from Hold to Buy and raised the price target from $45 to $65. The price target indicates a potential 25% upside from where shares traded when the upgrade was announced.
Similarly, Barclays raised the WDC's rating from Equal Weight (Hold) to Overweight (Buy) and added it to its list of favorite stocks for the "2nd Wave of AI." The list featured other semiconductor stocks like AMD (NASDAQ:AMD), Coherent (NYSE:NYSE:COHR), NXP Semiconductors (NASDAQ:NXPI), and Camtek (NASDAQ:CAMT).
Western Digital is up 12.9% since the beginning of the year. Investors who bought $1,000 worth of Western Digital's shares 5 years ago would now be looking at an investment worth $1,529.