Barclays Maintains an 'Overweight' on Western Digital Corp. (WDC); Supply Constraints through September? Could also See Some Good Pricing
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Price: $60.63 +1.98%
Rating Summary:
8 Buy, 14 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 24 | New: 24
Rating Summary:
8 Buy, 14 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 24 | New: 24
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Barclays maintains an 'Overweight' on Western Digital Corp. (NYSE: WDC), PT $45.
Barclays analyst says, "The silver lining is that if WDC is correct, and the industry is constrained amidst improving demand, then pricing should be favorable with the potential to improve margins (even if costs go up a bit). We believe drive makers are hesitant to point out this reality to investors in the wake of two major consolidation attempts that are still seeking approval from regulators. Our favorable view of pricing enables us to keep our FY12 EPS estimate for WDC rather stable. We continue to believe that WDC is a beneficiary of industry consolidation and its outlook is conservative."
Given potential shortages, we are lowering our estimates over the next few quarters. However, we remain confident that the WDC should benefit from pricing improvements and could see upside to margins. For 2011, we now estimate EPS of $3.10 (was $3.43) based on a 5% y/y decline in revenue to $9.36 billion (was $9.48B) factoring in gross margins of 18.5% (was 19.2%) and unit shipments of 203 million (+4% y/y)...For FY12, we now expect EPS of $4.10 (was $4.20) based on 4% y/y growth in revenue to $9.68 billion (was $9.83B), factoring in gross margins of 21.3% (was 21.2%) and unit shipments of 220 million (+8% y/y)."
For more ratings news on Western Digital Corp. click here and for the rating history of Western Digital Corp. click here.
Shares of Western Digital Corp. closed at $40.65 yesterday, with a 52 week range of $23.06-$45.09.
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Barclays analyst says, "The silver lining is that if WDC is correct, and the industry is constrained amidst improving demand, then pricing should be favorable with the potential to improve margins (even if costs go up a bit). We believe drive makers are hesitant to point out this reality to investors in the wake of two major consolidation attempts that are still seeking approval from regulators. Our favorable view of pricing enables us to keep our FY12 EPS estimate for WDC rather stable. We continue to believe that WDC is a beneficiary of industry consolidation and its outlook is conservative."
Given potential shortages, we are lowering our estimates over the next few quarters. However, we remain confident that the WDC should benefit from pricing improvements and could see upside to margins. For 2011, we now estimate EPS of $3.10 (was $3.43) based on a 5% y/y decline in revenue to $9.36 billion (was $9.48B) factoring in gross margins of 18.5% (was 19.2%) and unit shipments of 203 million (+4% y/y)...For FY12, we now expect EPS of $4.10 (was $4.20) based on 4% y/y growth in revenue to $9.68 billion (was $9.83B), factoring in gross margins of 21.3% (was 21.2%) and unit shipments of 220 million (+8% y/y)."
For more ratings news on Western Digital Corp. click here and for the rating history of Western Digital Corp. click here.
Shares of Western Digital Corp. closed at $40.65 yesterday, with a 52 week range of $23.06-$45.09.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
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