Western Digital's June Quarter Could Be A Bottom, 3 Analysts On FQ4 Outlook

Shares of Western Digital Corp WDC were trading lower on Tuesday, following the company’s weak fourth-quarter guidance.

Here are some key analyst takeaways from the earnings release.

Susquehanna On Western Digital

Analyst Mehdi Hosseini reiterated a Neutral rating and price target of $38.

Western Digital reported its March quarter top-line and bottom-line ahead of estimates, but gave a disappointing June quarter guide, “despite management calling out stabilizing demand across certain end markets, particularly in consumer,” Hosseini said in a note.

“Despite these signs of stabilization, WDC is continuing to absorb costs associated with getting supply in line with demand,” the analyst wrote. “We view the June-Q guide to mark a bottom in quarterly EPS losses though we do not expect profitability until mid-'24 while debt covenants would need to be renegotiated again,” he added.

Check out other analyst stock ratings.

Raymond James On Western Digital

Analyst Srini Pajjuri reaffirmed an Outperform rating, while reducing the price target from $46 to $42.

Western Digital’s results were consistent with the “recent results from NAND/HDD peers,” Pajjuri said.

“Cash burn continued in the quarter, but the liquidity position remains stable due to a combination of b/s cash and an unused revolver/term-loan of ~$3B,” the analyst wrote. “We are optimistic that the worst is behind in both HDD and NAND markets, and are modeling Jun-23Q to be a cyclical bottom,” he added.

Wedbush On Western Digital

Analyst Matt Bryson maintained an Outperform rating and price target of $60.

The broader NAND market “appears to be finally approaching a bottom, helped by a combination of production and capex cuts and the expected improvement of shipments into client/consumer markets as we believe destocking is slowing as customer/channel inventories have largely normalized with both content growth and some modest improvement in demand is likely to lead to better 2HCY'23 fundamentals,” Bryson wrote in a note.

The guidance appears “achievable/beatable,” as it reflects “overly conservative expectations around NAND price declines” and a significance decline in enterprise drive shipments, he added.

WDC Price Action: Shares of Western Digital were down 3.60% to $32.95 at the time of publication on Tuesday.