Western Digital (NASDAQ: $WDC) is a leading American company that designs and manufactures computer hard drives, NAND-flash back storage devices, and SSDs (solid-state devices) for PCs. The company, headquartered in San Jose, CA, is one of the top 100 technology and telecommunication companies by market cap.
The stocks reached a 52-week high of $72.35 during the mid-day tradition session on Monday, April 1, 2024, fueled by impressive quarterly results in January and the company spin-off update on March 5, 2024.
Analyst Forecasts 10% Growth for Western Digital Shares
Amit Daryani, an analyst from Evercore ISI Group, inaugurated a coverage on Western Digital Corp with an outperform rating andan $80 price target. The analyst stated that the stock is in a great position to outperform based on several favorable factors. Daryani forecasted approximately 10% higher than the average forecast.
Moreover, the company is also anticipating Exabyte (EB) demand to accelerate by 30% in the upcoming quarters. According to the analyst, Western Digital (WDC) will experience a convergence of cyclical HDD recovery as hyper scalers conclude nearline digestion.
Furthermore, the analyst expects a NAND recovery to be much bigger, as NAND capex is down 75% from its peak. He also forecasted gross margins on the HDD side of around 33% compared to the previous quarter’s 25%. He forecast NAND gross margin to 33% in fiscal year 2025 compared to 8% last quarter.
According to the analyst, the stock will drive value and gain a strong position as the information on the split and business models are clearer. Additionally, most investors underestimate WDC’s ability to reduce debt in the upcoming six months prior to the spin-off, which will help HDD to carry less debt than forecast. Daryanin noted that it could lead to a more substantial capital return program than anticipated.
WDC Stock Performance
$WDC is currently trading at $71.68, up 5.06% from its Thursday closing of $68.24. At the time of writing, the market cap is $23.459 billion, with a trading volume of 8,710,45. Over the past 52 weeks, the stock has appreciated 83.44% compared to the 27.39% gain of the S&P 500 in the same period.
Should You Buy $WDC?
The upcoming separation of Western Digital into two separate businesses has garnered the attention of investors since it was announced in October 2023. While no set date has been issued, the recent update at the start of March has led to a resurgence in interest in the stock. The two spinoffs are both looking promising, with high demand for their products, healthy balance sheets, and respectable margins. In the medium term, the upcoming separation could see huge gains for stock holders.
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