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Susquehanna Cuts Price Target on Western Digital (WDC) Following 4Q15

July 30, 2015 7:07 AM EDT
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Price: $68.73 +1.61%

Rating Summary:
    32 Buy, 17 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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Susquehanna maintained a Positive rating on Western Digital Corp. (NASDAQ: WDC), and cut the price target to $105.00 (from $110.00), following 4Q15. WDC delivered revenue of $3.19B, softer than consensus of $3.27B. EPS was reported at $1.51, $0.06 above consensus. WDC guided September-quarter revenue to $3.2B-$3.3B vs. consensus of $3.5B, and guided EPS to $1.50-$1.60 vs. consensus of $1.77.

Analyst Mehdi Hosseini commented, "We came away encouraged with WDC's June-quarter conference call commentary, even though September-quarter TAM guidance is below consensus. Specifically, we highlight several non-PC takeaways from the call that reaffirm our bull case: 1) MOFCOM commentary on the call was more constructive than what we heard on the March-quarter call, 2) increased emphasis on Exabyte growth (namely in Enterprise), highlights WDC's GMaccretive non-PC exposure, which reached 65% of total revenue in the June quarter, 3) very impressive June-quarter COGS and opex cost control signal that WDC is able to respond very quickly to a softer TAM environment, 4) WDC remains well-positioned in Enterprise HDD and SSD (SAS/PCIe), as 2HCY15 exabyte seasonality is poised to increase mix of highercapacity drives and SSDs. We note WDC was able to grow (Enterprise) SSD revenue by +9% Q/Q in a rather soft Enterprise environment We are lowering our FY16 EPS estimate (from $7.73 to $6.62) to account for a weaker start to FY16. Our price target though has been reduced to $105 (from $110) to account for positive MOFCOM commentary (given the $1.00- $1.50 accretion that could be realized if MOFCOM is approved)."

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 $78.75 yesterday.



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