Another Analyst Goes Cautious On Western Digital As Market Demand Worsens

Rosenblatt analyst Kevin Cassidy maintained Western Digital Corp WDC with a Neutral and lowered the price target from $45 to $35.
Following WDC management's numerous appearances at recent technology conferences, he cut his current quarter and out quarter estimates for Western Digital, which he did not consider surprising.
Management has clarified that market demand, particularly for NAND Flash, has worsened since the company gave its guidance on August 5.
Management is prudently slowing capacity increases by pushing out the NAND Flash technology transition and slowing the start-up of Fab 7.
The plan is to align output with the lower demand.
Related: Western Digital Shares Drop On Dismal Q1 Outlook; Beats Q4 Aided By Mixed Segment Performance
Due to increased weakness in the broad market, expectations are for the September quarter to be lower than the original guidance.
Free cash flow will likely be negative for the 1Q23 and FY23.
As management remains on track to reduce NAND Flash costs, he expects that the ASP declines this quarter and next are above the cost declines.
Specifically, Cloud customers became increasingly cautious while China's weakness lingers.
A week ago, Benchmark analyst Mark Miller reiterated a Sell on WDC and a $34 price target citing concerns over the strength and duration of the down cycle and weakening hyperscale.
Consistent with Seagate Technology Holdings PLC's STX view, hyperscale customers became more cautious.
Miller found Western Digital in a much stronger position to face a down cycle than the last, thanks to lower debt, greater access to capital, and a better mix.
Price Action: WDC shares traded lower by 2.4% at $36.87 on the last check Friday.
Photo Via Wikimedia Commons

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