WDC Upgraded to Strong Buy - Analyst Blog

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On Jan 1, Zacks Investment Research upgraded Western Digital Corp. ( WDC ) 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%.

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 time.

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 $2.07.

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 such as SeagateTechnology ( STX ) 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 Apple 's ( AAPL ) iOS and Google 's ( GOOG ) 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 experience.

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 shares.



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , GOOG , STX , TAM , WDC

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