Western Digital Profit to Surge on Higher Flash-Memory Prices, Analyst Says

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Western Digital

is going to make a lot more money in the coming year than most investors think.

That’s the view of Susquehanna Financial Group analyst Mehdi Hosseini. On Monday, he repeated his Positive rating on the maker of flash memory and hard-disk-drive products, while lifting his target price to $124 from $100. In an eye-opening call, Hosseini set an earnings estimate for the June 2022 fiscal year of $14.33 a share, nearly twice the Street consensus for EPS of $7.45.

The call reflects his optimism in particular about the continued improvement in demand for flash-memory products in a tight supply environment. The result is that prices are rising for NAND flash memory, dramatically improving the profitability outlook for Western Digital (ticker: WDC).

For the Western Digital March quarter, which will be reported on April 29, Hosseini sees profits of 70 cents a share, which is two cents above consensus, and toward the high end of the company’s guidance range from 55 cents to 75 cents a share. For the June quarter, he sees profits jumping to $1.32 a share, well above consensus at $1.01 a share, driven by an average 5% price increase from the March quarter.

He contends that “consensus estimates do not truly reflect Western Digital’s earnings power considering improving NAND fundamentals.”

Meanwhile, Benchmark analyst Mark Miller on Monday likewise repeated his Buy rating on Western Digital stock, lifting his target price to $80 from $75. Miller writes that the higher target price reflects “continued signs of improvement in the NAND market and the global economy along with expected strength in the Data Center and the PC market” later in 2021.

Despite the bullish notes, Western Digital stock on Monday is off 1.4%, to $67.95.

Write to Eric J. Savitz at [email protected]

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