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Shares of Western Digital (WDC - Analyst Report) hit a new 52-week high of $96.31 on Jun 2, eventually closing at $95.92. The closing share price represents an extraordinary one-year return of 51.75% and a year-to-date return of 16.01%.

On an average, Western Digital’s earnings have surpassed the Zacks Consensus Estimate by 5.48% over the last four quarters, making investors bullish on the stock. Moreover, the company has a long-term earnings growth expectation of 4.83%.

Western Digital is the largest HDD manufacturer in the U.S. It is worth noting that IT research firm Gartner expects worldwide HDD shipments to grow at a compound annual growth rate (CAGR) of 2.9% from 2013 (552 units) through 2018 (635 units).

Gartner also stated that high-capacity business drives are expected to grow at a CAGR of 25.1% during the period. Western Digital’s new high-capacity helium drives target this growth opportunity.

We believe the secular growth of digital data and Western Digital’s growing exposure to the small and medium business space are the long-term positives. We remain encouraged by the company’s launch of a string of storage devices under the mobile and cloud segment.

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 allows users to access content through different gadgets such as smartphone, tablets and personal computers.

Another positive is the significant rise in contribution from the company’s non-PC segment, which accounted for 53% of the revenues in the last reported quarter.

Nonetheless, weaker-than-expected PC shipments are affecting Western Digital’s results. According to IDC’s latest report, shipments are expected to decline 6.1% in 2014. Although the rate of decline is expected to stabilize from 9.8% registered in 2013 due to the refreshes, the return to growth remains a distant possibility.

Moreover, Western Digital’s strategic acquisitions to widen its SSD offerings are expected to position it better with respect to peers such as Seagate (STX - Analyst Report) and SanDisk Corp. (SNDK - Analyst Report).

Currently, Western Digital has a Zacks Rank #3 (Hold). Investors may consider a better-ranked stock like Micron Technology (MU - Analyst Report) sporting a Zacks Rank #2 (Buy).

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