Western Digital (WDC) PT Lifted to $81 at Needham & Company into Q1

October 22, 2013 7:52 AM EDT
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Price: $72.89 +1.70%

Rating Summary:
    26 Buy, 10 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 29 | Down: 29 | New: 23
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Needham & Company analyst Richard Kugele reiterated a Strong Buy rating and raised his price target on Western Digital Corp. (NASDAQ: WDC) from $77 to $81 into results on 10/24.

"We are proactively adjusting estimates for WDC to account for recent acquisitions (sTec, VeloBit, and Virident) and the likely flat TAM guidance for December," Kugele said. "While we continue to view these acquisitions positively, we believe near-term numbers should be adjusted. Looking forward into later-F14/F15, however, we continue to see upside to our estimates from the potential integration of HGST pending regulatory approval."

On the quarter, he commented: "We believe a strong end to the Sept. quarter likely helped the TAM exit in the 137-138M range, consistent with guidance (but perhaps a couple million more than was the trend earlier in Sept.). Pricing was extremely benign, channel inventory was 4 weeks or less, and WDC maintained share."

On a standalone basis, they expect a solid quarter from WDC, with unit shipments roughly 62M and ASPs stable, implying revenue/EPS of $3.85B/$2.13, consistent with our last published forecast.

Including the acquisition of sTec (closed 9/12), thye estimate $3.85B and EPS of $2.11 (which is where we are revising estimates this morning). Consensus (which we believe does not incorporate any acquisitions) remains $3.78B/$2.05. Guidance was $3.7-3.8B, GM 29%, and EPS $1.95-2.05.

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 $72.31 yesterday.

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