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Western Digital Corp WDC

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Western Digital Set to Capitalize on Strong Demand Cycles in the Short Term, Raise FVE to $65

Analyst Note

| William Kerwin |

We are raising our fair value estimate for no-moat Western Digital to $65 per share from $53, and upgrading its moat trend rating to stable, based on expectations for sustained demand for enterprise hard disk drives, or HDDs, over the next five years. After 2021, we think demand for mass capacity drives at cloud and enterprise customers will more than offset secular declines in consumer HDDs through 2025, leading to our updated stable trend rating. We forecast both the HDD and flash markets to have strong demand cycles through fiscal 2023, and for Western to generate 6% compound annual sales growth through 2025, through the cycle. At our new valuation, we view shares as fully valued, but would recommend investors look for a greater margin of safety to invest.

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Company Profile

Business Description

Western Digital is a leading vertically-integrated supplier of data storage solutions, spanning both hard disk drives (HDDs) and solid state drives (SSDs). In the HDD market it forms a practical duopoly with Seagate, and it is the largest global producer of NAND flash chips for SSDs in a joint venture with competitor Kioxia.

5601 Great Oaks Parkway
San Jose, CA, 95119
T +1 408 717-6000
Sector Technology
Industry Computer Hardware
Most Recent Earnings Mar 31, 2021
Fiscal Year End Jul 3, 2021
Stock Type Cyclical
Employees 63,800


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