Goldilocks Story At Western Digital Remains Intact, Poised For $10+ EPS

RBC Capital has said Western Digital Corp (NASDAQ: WDC) remains well-positioned for $10+ EPS after the company’s December quarter results handily beat Street estimates.

“We think fundamentals remain intact, as WDC should benefit from a favorable HDD environment and a tight NAND market,” analyst Amit Daryanani wrote in a note.

Analyst's Expectations

Western Digital reported December quarter revenue/EPS of $4.89 billion/ $2.30 versus Street at $4.76 billion/$2.12, driven by strength in enterprise and notebooks. The impressive results set the ball rolling toward higher EPS over the next several quarters.

Amid favorable HDD trends, Daryanani sees upside to margins, EPS and free cash flow. He also sees EPS growth from cost savings related to the acquisitions of HGST and Sandisk.

“We think the March-qtr guide ($4.55B/$2.00-2.10) is appropriately conservative and should the current demand metrics hold up we see potential for further upside,” Daryanani added.

The analyst maintains his Outperform rating but raised his price target by $10 to $90.

Shares of Western Digital closed Wednesday’s trading at $80.02.

Western Digital is expected to report its second quarter 2017 results Thursday afternoon after the closing bell.