Western Digital (WDC): Path To EPS of $10 - RBC
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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.
Shares of Western Digital Corp. closed at $62.27 yesterday.
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