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Western Digital Stock: Analysts See Chances for Big Rally

western digital stock

Western Digital (NASDAQ: WDC) stock price is likely to extend the upside momentum in analysts’ view. The market pundits are showing confidence in its future fundamentals and financial numbers. The second-quarter beat and robust outlook are adding to investor’s sentiments. WDC share price is currently slightly shy from the 52-weeks high of $75.

Western Digital stock price surged almost 45 per cent in the past twelve months. Despite a significant share price rally, the stock is trading around 20 times to earnings compared to the industry average of 25 times to earnings.

WDC Western Digital Corporation daily Stock Chart

Analysts See Further Upside for Western Digital Stock

Susquehanna raised the WDC share price target to $100 from the previous target of $90, citing strong financial numbers and a robust outlook for steady upside momentum. “WDC’s earnings power is on the rise and now expects annualized EPS of about $8 by the end of this year and $10 by the end of 2021,” Susquehanna analyst Mehdi Hosseini said,

Cowen lifted the price target $88 with Outperform ratings. Cowen analyst forecasts NAND gross margins to enlarge to 35-40 per cent in the second half due to improving supply/demand and faster than expected enterprise SSD share gains. WDC ended the second quarter with $3.1bn of total cash and cash equivalents.

Second Quarter Results and 2020 Outlook is Boosting Sentiments

The company generated second-quarter revenue of $4.2bn, up 0.2 per cent from the year-ago period. It has also successfully declined losses compared to the past year period. Its second-quarter net loss of $139ml declined substantially from a loss of $487ml in the past year period. Although the company expects third-quarter revenue in the range of $4.1bn, it is anticipating a return to profitability in 2020.

Western Digital Stock: Analysts...

We expect an accelerated recovery in our flash gross margins, which coupled with ongoing strength in demand for both hard drives and flash, positions us well for continued profitable growth in the calendar year 2020,” Steve Milligan, chief executive officer, Western Digital (WDC).

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.