Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

A recent survey by The Online Investor (published by Forbes) revealed that Western Digital Corporation (WDC - Analyst Report) has toppled Xilinx, Inc. ((XLNX - Analyst Report)) to take over the #316 spot in terms of market capitalization.

We believe that Western Digital is reasonably priced in the $37.0 to $38.0 range. Further, it has the potential for some upward movement considering the kind of benefits that it can derive from the adoption of cloud computing. .

Companies across the world will prefer cloud computing as it provides the cheapest option for data storage with quick access. This data will be stored at an offsite server, which in turn would require huge data storage capacity. Here lies the opportunity for companies like Western Digital, EMC Corporation (EMC - Analyst Report) and Seagate Technology Plc. (STX - Analyst Report). Sensing this opportunity the company is making some marketing moves to tap this opportunity.

Moreover, Western Digital is coming up with a host of hardware and software solutions, which are particularly designed to make storage easier and more readily available. Additionally, we believe that after the acquisition of Viviti Technologies (formerly Hitachi GST) for $3.9 billion in cash and 25 million shares of the company, WDC has strengthened its foothold in the data storage business. Although the brands compete separately in the market, the deal should strengthen the company’s revenue base in the future.

On the other hand, the softness in PC demand may affect the business. Although the company has been able to handle competition efficiently, bigger players like Fujitsu Ltd, Samsung and Toshiba pose considerable challenges.

Separately, the benefits achieved from higher ASPs due to tight supply of hard disk drives (HDDs), resulting from the disruption caused by the Thailand flood, are exhausting. This is due to normalization of supply/demand metrics. This has been reflected in the company’s second quarter guidance, which is sequentially weak. However, management believes that new product launches, further cost optimization, strategic allocation of capital and efficient execution will drive customers.

Currently, Western Digital has a Zacks Rank #3 (Hold).

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

Learn more

Start for as little as $4.50 per trade.

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
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%