Deutsche Cuts Price Target on Western Digital (WDC), But Reaffirms Buy Rating on Long-Term Earnings Power
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Price: $508.80 +4.41%
Rating Summary:
33 Buy, 17 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
33 Buy, 17 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Deutsche Bank reaffirmed its Buy rating on shares of Western Digital Corp. (NYSE: WDC) following the releases of its first quarter results. The firm is also reducing its price target from $59 to $48 following managements expectations from Thailand floods.
The company reported strong first quarter results with sales and earnings topping expectations, but an analyst at Deutsche notes, "This strong performance was dwarfed by the impacts from recent flooding in Thailand."
Management provided limited visibility on when they plan to reopen plants in Thailand and noted its midpoint sales and volume outlook is down roughly 60 percent quarter over quarter.
The company's Thailand plants accounts for 60 percent of its total units and the impact from the flooding is expected to last for at least two quarters. Deutsche reports weak demand will no longer be the issue, but the supply for HDD components, like HDD spindle motors, will now be the major issue since plants for a majority of suppliers were also flooded. Management indicated a flat TAM growth rate for the second quarter.
The firm believes Western Digital's long-term earnings power remains intact and encourages investors to take advantage of any downside in the stock. Shares of WDC are trading up 0.7 percent on the day after closing down 9.2 percent on October 19.
Due to flooding and the company's new outlook, Deutsche has slashed its 2012 EPS estimates to ($1.30) for Q2, ($1.24) for Q3, ($0.08) for Q4, and to ($1.50) for fiscal 2012. Revenue for the year is now forecasted to be $6.89 billion. For fiscal 2013, the firm estimates EPS of $4 with $11.82 billion in sales.
For more ratings news on Western Digital Corp. click here and for the rating history of Western Digital Corp. click here.
Shares of Western Digital Corp. closed at $24.44 yesterday.
The company reported strong first quarter results with sales and earnings topping expectations, but an analyst at Deutsche notes, "This strong performance was dwarfed by the impacts from recent flooding in Thailand."
Management provided limited visibility on when they plan to reopen plants in Thailand and noted its midpoint sales and volume outlook is down roughly 60 percent quarter over quarter.
The company's Thailand plants accounts for 60 percent of its total units and the impact from the flooding is expected to last for at least two quarters. Deutsche reports weak demand will no longer be the issue, but the supply for HDD components, like HDD spindle motors, will now be the major issue since plants for a majority of suppliers were also flooded. Management indicated a flat TAM growth rate for the second quarter.
The firm believes Western Digital's long-term earnings power remains intact and encourages investors to take advantage of any downside in the stock. Shares of WDC are trading up 0.7 percent on the day after closing down 9.2 percent on October 19.
Due to flooding and the company's new outlook, Deutsche has slashed its 2012 EPS estimates to ($1.30) for Q2, ($1.24) for Q3, ($0.08) for Q4, and to ($1.50) for fiscal 2012. Revenue for the year is now forecasted to be $6.89 billion. For fiscal 2013, the firm estimates EPS of $4 with $11.82 billion in sales.
For more ratings news on Western Digital Corp. click here and for the rating history of Western Digital Corp. click here.
Shares of Western Digital Corp. closed at $24.44 yesterday.
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