On Jan 1, Zacks Investment Research upgraded
Western Digital Corp.
) to a Zacks Rank #1 (Strong Buy).The upgrade came on the back of
positive estimate revisions over the last 60 days. WDC's shares
are up 81.4% year to date while it has an outstanding one-year
return of 104.9%. WDC also delivered positive earnings surprises
in the last four quarters with an average beat of 11.4%.
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Why the Upgrade?
Over the last 60 days, WDC witnessed two upward revisions for the
current quarter as well as for fiscal 2014. The Zacks Consensus
Estimate for both the current quarter and full year went up by a
cent to $2.07 and $7.99, respectively over the same period of
It is also worth noting that the Zacks Consensus Estimate for
WDC's second quarter revenues and earnings are within
management's guided range. WDC guided revenues between $3.775
billion and $3.875 billion, and the Zacks Consensus Estimate is
pegged at $3.85 billion. Non-GAAP earnings per share are expected
between $1.95 and $2.10, and the Zacks Consensus Estimate is
Some of the current buoyancy surrounding the shares is related to
the company's business shift toward non-PC applications, secular
growth of digital data and growing exposure to the small and
medium business space. Additionally, the company has been
expanding its presence in the SSD storage market, which is
expected to place WDC in a better position compared to its peers
) and Fusion-io, Inc.
Moreover, the company has also expanded its My Cloud solutions
with My Cloud EX4, a broader portfolio of network attached
storage (NAS) hard drives. My Cloud EX4 can be accessed through
) iOS and
) operating systems, thus enabling users to access their files
via smartphones or tablets.
In addition, the company introduced WD Black2 dual drive. The new
hybrid dual drive storage solution will help WDC to meet growing
business needs with flexibility and offer improved user
Also, Western Digital is the largest HDD manufacturer in the U.S.
Western Digital's market share in the total addressable market
(TAM) of HDD increased from 44.9% in the previous quarter to
45.1%. These factors culminated in the Zacks Rank upgrade on WDC