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With a market cap of $22.5 billion, San Jose, California-based Western Digital Corporation (WDC) is a leading player in the data storage industry. The company designs and manufactures a wide range of hard disk drives (HDDs), solid-state drives (SSDs), and flash-based storage solutions for various applications, including personal computing, enterprise solutions, and consumer electronics.
Shares of the leading data storage manufacturer have outperformed the broader market over the past 52 weeks. WDC has climbed 55% over this time frame, while the broader S&P 500 Index ($SPX) has gained 32.6%. In 2024, WDC stock surged 27.3%, compared to SPX's 21.2% YTD gain.
Narrowing the focus, Western Digital stock has also outpaced the Technology Select Sector SPDR Fund's (XLK) 32.1% rise over the past 52 weeks and 17.9% increase on a YTD basis.
Western Digital's stock surged 4.7% on Oct. 25 following the company's strong Q3 earnings, which showcased significant gross margin improvement and exceeded expectations for adjusted operating profit and EPS. The cloud segment, accounting for 54% of total revenue, drove this outperformance with a remarkable 17% sequential growth and a 153% year-over-year increase, fueled by higher nearline HDD and enterprise SSD shipments to data center customers. Despite slightly lower guidance for the next quarter, the market responded positively to the overall strength and momentum in Western Digital's business.
For the current fiscal year ending in June 2025, analysts expect WDC's EPS to grow 696.4% year-over-year to $6.56 per share. The company's earnings surprise history is promising. It topped or met the consensus estimates in all of the last four quarters.
Among the 21 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 16 “Strong Buy” ratings and five “Holds.”
On Oct. 25, Susquehanna analyst Mehdi Hosseini increased Western Digital's price target to $83 while maintaining a “Neutral” rating, citing strong HDD performance and eSSD gains, along with anticipated NAND ASP recovery by mid-2025, which suggests ongoing improvements in gross margin, operating margin, and earnings per share through 2025.
The mean price target of $91.21 represents a premium of 37.2% to WDC's current levels. The Street-high price target of $115, implies a potential upside of nearly 73% from the current price levels.
On the date of publication, Sohini Mondal 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.
