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Valued at a market cap of $22 billion, Western Digital Corporation (WDC) develops, manufactures, and sells data storage devices and solutions. The San Jose, California-based company offers a broad range of hard disk drives and solid state drives used in various consumer electronic devices, including desktop PCs, video game consoles, and digital video recorders, to name a few, and is expected to announce its fiscal Q1 earnings results after the market closes on Thursday, Oct. 24.
Ahead of this event, analysts expect the tech company to report a profit of $1.52 per share, up 177.2% from a loss of $1.97 per share in the year-ago quarter. The company has consistently beaten Wall Street's earnings estimates in the last four quarters. Its adjusted earnings of $1.25 per share for the last quarter topped the consensus estimates by 15.7%.
The company benefited from an 89% annual growth in revenues from its cloud end market and a 16% year-over-year revenue increase from its client end market. This was fueled by higher shipments and price per unit for nearline HDDs combined with higher enterprise SSD bit shipments and increasing flash average selling prices. For fiscal 2025, analysts expect WDC to report an EPS of $7.75, up 804.6% from a loss of $1.10 in fiscal 2024. Moreover, EPS is expected to increase 9.7% year-over-year to $8.50 in fiscal 2026.
Shares of WDC have rallied 28.6% on a YTD basis, outperforming both the S&P 500 Index's ($SPX) 22.5% surge and the Technology Select Sector SPDR Fund’s (XLK) 19.5% return over the same period.
WDC’s effective structural changes and surging demand for AI-related memory have led to a broad recovery in the company’s cloud and client end markets, thereby contributing to its upward price movement.
However, despite beating Wall Street’s adjusted earnings estimates, shares of WDC plunged 9.7% after its Q4 and full-year 2024 earnings release on Jul. 31. The company reported revenues of $3.76 billion in Q4, which missed the consensus estimates of $3.77 billion. The slight revenue miss coupled with the company’s Q1 2025 EPS and revenue guidance falling below the consensus estimates might have dampened investor confidence.
Analysts' consensus view on Western Digital’s stock is highly optimistic, with a "Strong Buy" rating overall. Among 21 analysts covering the stock, 16 recommend a "Strong Buy," and five suggest a "Hold" rating. This configuration is slightly less bullish than three months ago when 17 analysts suggested a "Strong Buy."
The average analyst price target for WDC is $88.26, indicating a potential upside of 31.1% from current levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
