Western Digital Price Target Cut By Analysts Post Q4 Beat

Western Digital Corp WDC clocked 8% year-on-year revenue growth to $4.53 billion in Q4, beating the consensus of $4.49 billion.
Non-GAAP EPS of $1.78 beat the consensus of $1.68.
Barclays analyst Tom O'Malley had an Equal Weight and $55 price target.
The market expected a reset, but the depths of decline and the exclusion of potential DC weakness calls into question the BV base case, he noted.
Mizuho analyst Vijay Rakesh reiterated a Buy rating with a $62 price target, down from $68, as he saw the potential to unlock value via an activist shareholder and NAND separation amid headwinds.
WDC reported an inline June quarter but guided its September quarter down significantly.
He also expected the gross margins to decline Q/Q.
He admitted that WDC noted a significant cut to September quarter NAND revenues at $1.6 billion, which could be close to a bottom. However, he saw NAND pricing headwinds into year-end.
He saw Client HDD revenue down 30% Y/Y, WDC to reduce output capacity footprint, and nearline remains stable. Still, he believes there are worries about Cloud spending.
Citi analyst Jim Suva cut its price target to $60 from $75 on reduced sales and EPS and a much higher tax rate from R&D tax law changes.
While the results by Western Digital were solid, the company saw a sharp reduction in orders late in the quarter, leading to a material guide down for the September quarter, he noted.
Specifically, the PC and consumer electronics industry is facing a slowdown, and big-box retailers are reducing inventory.
On a positive note, data center and cloud remained strong.
He continues to view WDC stock as a deep value and shareholder activism catalyst, working with shareholders for various potential future value creation actions.
Rosenblatt analyst Kevin Cassidy had a Neutral and cut the price target to $45 from $60.
Following an inline June quarter, management pointed to a sudden drop-off in orders as PC, smartphone, and retail customers made plans to reduce inventory, leading to a guidance miss by a significant margin.
He saw it hopefully as a steep inventory adjustment and expected demand to resume in the out quarters.
He believed that once NAND Flash ASPs fall faster than cost reduction, it takes many quarters before gross margins can recover, particularly during an over-supplied market.
He modeled a gradual demand recovery.
Price Action: WDC shares traded higher by 2.46% at $48.25 on the last check Monday.

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