WDC - Western Digital trading at 'attractive valuation' following Q3 results guidance: Baird

2023-05-09 15:21:56 ET

After Western Digital ( NASDAQ: WDC ) reported third-quarter results and guidance on Monday, investment firm Baird said the storage maker's stock is trading at an "attractive valuation."

Analyst Tristan Gerra, who has an outperform rating and a $50 per-share price target on Western Digital ( WDC ), noted that the stock is "inexpensive" on any earnings per share measure over the past 15 years. And given that the June quarter is likely to be the trough in NAND pricing and underutilization, the medium-term outlook is favorable.

"Our expectation for server units to stabilize in [calendar second-quarter] and rebound in [the second-half] should drive a reacceleration in HDD revenue growth, while management sees signs of a recovery in China for the second half," Gerra wrote in an investor note.

Gerra also noted that Western Digital's ( WDC ) management said it sees PC shipments "about back in line" with demand as inventory deleveraging is mostly complete.

Western Digital ( WDC ) expects fiscal fourth-quarter revenue to be in the range of $2.40B to $2.6B, well below the $2.83B consensus. It also expects to lose between $1.90 and $2.20 per share on an adjusted basis, well below the adjusted loss of $1.56 per share analysts were expecting.

Western Digital ( WDC ) shares fell around 2% to $33.52 in late day trading on Tuesday.

More on Western Digital and storage

• Western Digital's results unlikely to cause 'significant' sentiment shift: Wells Fargo
• 'Weak' IT spending in March may have impacted chips: UBS
• Western Digital slips as it discloses network security incident

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