- Rosenblatt did not expect any surprises from Seagate Technology Holdings PLC (NASDAQ:STX) and Western Digital Corp (NASDAQ:WDC) pre-announcing their March quarter results.
- The June quarter outlook is a different story.
- Continued COVID-related shutdowns in China may further delay security system deployments that use HDD storage.
- June quarter HDD revenue could have some upside if the companies re-purpose manufacturing capacity from this market to mass storage.
- Meanwhile, the NAND flash market's production issues may have created shortages in 2QC22, followed by oversupply in 2HC22.
- Therefore, it continued recommending the HDD pureplay, STX, for its stable business model, high dividend, and valuation.
- Rosenblatt remained skeptical of the NAND Flash market, particularly considering the increased capacity in 2HC22.
- Rosenblatt maintained its Buy rating for STX and Neutral rating for WDC.
- Wells Fargo had also slashed the price targets of the companies. Susquehanna downgraded the stocks.
- Price Action: WDC shares traded higher by 1.59% at $50.29 on the last check Thursday. STX traded lower by 1.43% at $84.50.
