Back to top

Analyst Blog

On Feb 28, 2014, we issued an updated research report on Western Digital (WDC - Analyst Report). Despite reporting better-than-expected second-quarter results, the company expects a sequential decline in revenues due to lower total addressable market (TAM) impacted by seasonality. Moreover, the company’s earnings estimates are expected to be affected due to the sTec and Virident acquisitions.

Nonetheless, Western Digital shipped 63.1 million hard drives at an average selling price (ASP) of $61.0. Reported shipment was up from 62.6 million sequentially and 59.2 million in the year-ago quarter. Moreover, Western Digital’s shift toward non-PC applications continued as 34% of the quarter’s revenues came from the segment during the last reported quarter.

We believe the secular growth of digital data and growing exposure to the small and medium business space are the long-term positives. The company is launching storage devices to attract more customers.

Moreover, the company is expected to get good mileage from its cloud-based business. Cloud-based storage has become the order of the day as it enables the access of content through different gadgets such as smartphone, tablets and personal computers.

To cater to this pent up demand, the company expanded its My Cloud solutions with My Cloud EX4 — a broader portfolio of network attached storage hard drives. My Cloud EX4 will help the company meet growing business needs with improved flexibility and security.

Moreover, strategic acquisitions to expand its offerings in the SSD segment is expected to place Western Digital in a better position compared to its peers such as Seagate (STX - Analyst Report) and SanDisk Corp. (SNDK - Analyst Report). However, continued investments in product innovation could result in flattish margins in the near term.

Also, Western Digital witnessed lower estimate revisions for the March quarter over the last 60 days. During the period, Western Digital’s earnings estimate dropped from $1.91 to $1.88.

Currently, Western Digital has a Zacks Rank #3 (Hold). Investors can consider a better-ranked stock like Juniper Networks (JNPR - Analyst Report) which sports a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%