Western Digital Corp (WDC) shares experienced a significant surge in early Friday trading, fueled by the company’s impressive fiscal first-quarter earnings report. The results, released amidst a flurry of earnings announcements, have elicited positive reactions from analysts who are particularly bullish on the company’s prospects.
Key Analyst Takeaways
Several analysts have expressed optimism about Western Digital’s performance, highlighting key areas of strength and potential for continued growth. Here’s a breakdown of their observations:
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Cantor Fitzgerald:
Analyst C.J. Muse maintained an Overweight rating on WDC, raising the price target from $80 to $95. Muse pointed to the company’s robust revenue performance, exceeding $4.10 billion, although slightly below consensus estimates. He praised the company’s earnings per share, which surpassed Street expectations. Muse also expressed confidence in the company’s future growth trajectory, citing anticipated improvements in both HDD and NAND gross margins. The planned spin-off of the company’s NAND division, scheduled for the first quarter of 2025, is also a factor contributing to his optimism.*
Benchmark:
Analyst Mark Miller reiterated a Buy rating and a price target of $92. Miller highlighted the recovery in Western Digital’s data center performance, fueled by strong demand for enterprise SSD products. The HDD segment achieved record revenues and margins due to record data center sales. However, Miller acknowledged that the company’s NAND market share has contracted over the past three quarters. Nonetheless, he sees a second wave of regenerative AI as a potential growth opportunity in the second half of fiscal year 2025.*
RBC Capital Markets:
Analyst Matt Bryson reaffirmed an Outperform rating and a price target of $95. Bryson pointed to significant expansion in the HDD segment’s gross margins, reaching a record 38.1%. The NAND segment also saw improved gross margins, reaching 38.9%, with average selling prices (ASPs) increasing by 4% sequentially. Bryson was particularly impressed with the company’s revenue and earnings guidance, suggesting positive momentum going forward. He also noted that the NAND and HDD businesses are now operating separately following the completion of the soft spin, with the formal split expected to be finalized in the fiscal second quarter.Price Action and Outlook
Following the release of the earnings report and positive analyst commentary, Western Digital’s shares soared by 8.23%, reaching $71.78 at the time of publication on Friday. This surge in share price reflects investors’ confidence in the company’s strong performance and future potential. With continued growth in data center demand, a favorable outlook for both HDD and NAND margins, and the impending spin-off of the NAND division, Western Digital appears well-positioned for further success in the months ahead.
