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Western Digital 2Q Earnings Expectation Analyst Projects Strong 2Q Earnings for Western Digital, Labeling the Risk-Reward Attractive

Shares of Western Digital Corp WDC surged in early trading on Tuesday, following forecast revisions by prominent analysts.

The San Jose, California-based company is expected to report its fiscal second-quarter results at the high end of guidance, buoyed by the unexpectedly rapid improvement in NAND pricing since October, according to Deutsche Bank.

The Analyst’s View: Sidney Ho upgraded Western Digital’s rating from Hold to Buy, concurrently raising the price target from $45 to $65.

Evaluating the Prospects: Regulatory approval is unnecessary for the company’s planned spin-off of its Flash business, which is likely to conclude as scheduled in the latter part of 2024, Ho indicated in the upgrade note.

The analyst elevated Western Digital’s earnings estimates for the fiscal second and third quarters, projecting figures of -$1.05 per share (as opposed to the guidance range of -$1.20 +/-$0.15) and -34 cents per share respectively, up from the previous estimates of -$1.20 and -76 cents per share.

The revision reflects improving NAND pricing and the company’s issuance of $1.6 billion of convertible debt on 11/3/23, with a portion of the proceeds used to pay down other debt instruments.

“With the stock trading below the low end of the range, we believe the risk-reward is attractive,” Ho further stated.

WDC Price Action: Western Digital shares had climbed by 4.19% to $52.10 at the time of publication on Tuesday.

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