Western Digital Finally Clearing Regulatory Hurdles

Bluefin sees Western Digital Corp (NASDAQ: WDC) gaining some momentum as it clears the MOFCOM regulatory hurdles and resuming consumer electronics demand for the 2016 holiday periods.

The momentum is likely to also be spurred by an improvement in PC trends.

The hands of Western Digital have been tied in the past few years over scrutiny from China's Ministry of Commerce (MOFCOM) relative to the Hitachi GST merger immediately followed by the SanDisk acquisition.

"With a defensive posture, WDC was oft-times powerless to make major strategic changes and decisions in trying to limit further MOFCOM scrutiny. Now that these hurdles have been cleared, we expect WDC to act in a far more aggressive fashion," analyst John Donovan wrote in a note.

Related Link: Oversupply And 3 Other Reasons Goldman Downgrades Western Digital To Sell

The analyst also expects "rising enterprise demand thanks to data center build outs, with higher capacity near-line HDDs and premiums for Helium-based solutions."

Meanwhile, Donovan emphasized that the long-term fundamentals of Western Digital lies squarely in the SanDisk acquisition and the ability to navigate 3D NAND.

"As WDC-SNDK migrates from planar to 3D, Samsung, Intel Corporation (NASDAQ: INTC), and Micron Technology, Inc. (NASDAQ: MU) have a sizable lead and are all investing heavily in 3D expansion," Donovan highlighted."

As such, the analyst noted that investors should monitor the company's progress on 3D while opining that concerns over CFO change and a likely conservative guide is overblown.

"The sheer level of capital needed as well as the experienced, motivated, talented, and well-funded competitive landscape relative to the SNDK product line concerns us longer-term for WDC, and we would take profits when possible. We do view the recent pullbacks as an opportunity to buy," Donovan added.

Shares of Western Digital closed Wednesday's regular trading at $44.78 and were seen down 0.54 percent to $44.52 Thursday.

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