Western Digital (WDC) PT Raised to $60 at RBC Capital Following Raised Outlook
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RBC Capital analyst Amit Daryanani reiterated an Outperform rating and boosted his price target on Western Digital Corp. (NASDAQ: WDC) to $60.00 (from $56.00) after the company pre-announced better than expected Q1 results.
Daryanani commented, "WDC positively pre-announced Sept-qtr results with upside to both revenues and EPS vs. its initial guide. WDC expects Sept-qtr results to be ~$4.45-4.55B/$1.00-1.05 (~15c EPS upside vs. its guide). Much of the upside appears to be gross margin driven (~100bps upside) coupled with benefits from lower interest expense that is partially offset by higher-than-planned OPEX. We are raising our forward estimates higher to reflect the Sept-qtr upside and lower interest expense from the recent debt refi that company did. Fundamentally, we think WDC should see revenue/EPS ahead of expectations in H2:16 and possibly in H1:17 given the confluence of strong HDD fundamentals coupled with a supply-constrained NAND environment, in our opinion. We further see EPS upside getting amplified from sustained deleverage and lower tax rate as well. Maintain OP and adjusting our target to $60."
Shares of Western Digital Corp. closed at $47.55 yesterday.
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