Western Digital raised at Goldman Sachs on improving fundamentals

Western Digital (NASDAQ:) was raised to Neutral from Sell, with a new price target of $48 per share, up from $31 at Goldman Sachs in a note Tuesday.

Analysts said the firm is upgrading the stock based on improving NAND/HDD fundamentals.

“While we remain concerned that the cyclical upturn in NAND could be short-lived and/or underwhelming in magnitude relative to DRAM, we believe the combination of supply-side adjustments and normalizing
demand will drive a positive earnings estimate revision cycle over the coming quarters,” the analysts noted.

“Cyclical Recovery in Nearline HDD: we believe the Nearline HDD market has bottomed with industry EB shipments down 51% peak-to-trough (2Q22-2Q23), per IDC, and disciplined supply likely to lead to a more benign pricing environment going forward,” the analysts added.

Furthermore, the investment bank said the higher price target follows WDC’s extensive strategic review, in which it concluded that spinning off its NAND business would be the best executable option as it looks to unlock value.