Western Digital (WDC): Path To EPS of $10 - RBC

November 29, 2016 6:55 AM EST
Get Alerts WDC Hot Sheet
Price: $72.42 -1.12%

Rating Summary:
    26 Buy, 10 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 22 | Down: 32 | New: 34
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RBC Capital analyst, Amit Daryanani, reiterated his Outperform rating on shares of Western Digital Corp. (NASDAQ: WDC) ahead of the upcoming analyst day on 12/6.

He sees several key drivers:
1) visibility into low-single-digit growth driven by uptick in NAND portfolio, nearline HDD, and enterprise systems solutions
2) Higher gross margin with “high 30%” upside potential driven by better mix (more NAND and nearline), cost takeout (HGTS and SNDK), and revenue leverage
3) 3D NAND roadmap and ability to achieve cross-over points in H2:17 with 64-L ramps
4) Strong FCF generation that will be earmarked for debt reduction but long-term enables an attractive capital allocation

The analyst also sees two possible catalysts:
1) WDC could update Dec-qtr guide that is likely better than Street models given revenue and margin tailwinds
2) Update/resolution on Samsung IP could be a positive for the stock given this is out of consensus models for 2017 and beyond.

No change to the price target of $72.

For an analyst ratings summary and ratings history on Western Digital Corp. click here. For more ratings news on Western Digital Corp. click here.

Shares of Western Digital Corp. closed at $62.27 yesterday.

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