Western Digital Shares Slip Over 10% Despite Strong Q2 Results — What Does The Street Think?

• TD Cowen raised its price target on Western Digital to $325 from $200, with a ‘Buy’ rating, citing the firm’s strong results.
• Morgan Stanley raised the firm's price target to $306 from $260, with an ‘Overweight’ rating, while comparing its demand strength and visibility to that of Seagate Technology.
• Goldman Sachs, Citi, JPMorgan, and UBS were among other analysts who also raised their price targets on the company.

Shares of Western Digital Corp. (WDC) tanked more than 10% on Friday, a day after reporting strong second-quarter (Q2) earnings.

The company reported revenue of $3.02 billion for the quarter, 25% higher compared to the same period last year, and above analyst estimates of $2.9 billion.

The data storage company reported earnings of $2.13 per share for the quarter, also beating analyst estimates of $1.93 per share.

Street Consensus

TD Cowen raised its price target on Western Digital to $325 from $200, with a ‘Buy’ rating, citing the firm’s results. The analyst said results reflect strong execution, which supports its gross margin expansion, according to TheFly.

Bank of America analyst Wamsi Mohan also increased Western Digital’s price target to $345 from $257, while maintaining a ‘Buy’ rating on the shares. The analyst said the company reported fiscal Q2 earnings above expectations and guided above Street estimates on all metrics.

Meanwhile, Morgan Stanley raised the firm's price target to $306 from $260, with an ‘Overweight’ rating. The analyst said that Western Digital showed very similar demand strength and visibility like Seagate Technology Holdings (STX). Morgan Stanley said that despite this, the market continues to underappreciate sustainable pricing tailwinds and the subsequent flow-through to margins and EPS.

Goldman Sachs, Citi, JPMorgan, and UBS were among other analysts who also raised their price targets on the company.

Hyperscaler Focus

On Friday, Western Digital CEO Irving Tan said in an interview with CNBC that the company is focusing on hyperscaler demand, adding that it is where the “bulk of storage is happening.”

“In fact, storage is really growing increasingly to the cloud,” Tan said. He added that enterprises are moving more of their storage to the cloud to take advantage of AI capabilities.

“We’ve really pivoted our engineering teams to be very close to the needs of our hyperscale customers, not only in terms of the capacity requirements that they have, but what are the feature, functionality, and capabilities that we need to deliver for them to be able to prepare for AI applications coming down the road as well,” he said. 

What Are Stocktwits Users Saying?

On Stocktwits, retail sentiment around WDC shares remained on the ‘extremely bullish’ territory over the past 24 hours amid ‘extremely high’ message volumes.

One bullish user said that the fundamentals of the company are still looking good, even though memory shortage is an issue.

Another bullish user said that the markets are in a ‘memory super cycle’ and Western Digital is still incredibly cheap.

Shares of WDC have more than quadrupled in the last year.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also Read: Webull Stock Tumbles To All-Time Low — Why Is Retail Still Bullish?

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