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Argus Research lowered its price target from $600 to $500 while keeping its buy rating on the stock. This follows a similar move by Cantor Fitzgerald, which also cut its target to $625 earlier in the week. These adjustments bring the average analyst target to about $617. While these firms are lowering their price targets, they are keeping their positive ratings. This suggests they still believe in the company's long-term growth from AI storage demand but are adjusting for a stock price that has been volatile lately. For a long-term owner, the core business story of high-capacity drive demand remains the same.
Source: Argus Research
After Western Digital reported its October results, we updated our fair value. We moved our rating from Buy to Watch. We raised our expectations for revenue growth and for how much money the company keeps after production costs. We have added the risk of Toshiba adding too much manufacturing capacity to what we track, and we now monitor how the company's remaining stake in SanDisk creates swings in reported profit.
Following a strong start to the year, the company now expects sales to grow between 66 and 72 percent in the coming quarter. This outlook suggests the current rush to build out AI infrastructure is not slowing down, as cloud providers continue to buy high-capacity hard drives at a rapid pace.
This forecast is a good sign for the storage industry's current boom. By projecting 5.1 billion dollars in revenue, the company is signaling that it has both the supply and the pricing power to keep growing much faster than its historical average.
Source: Proactive Investors
The company brought in $4.38 billion in revenue last quarter, a 55 percent jump from a year ago. Profits reached $4.64 per share, easily beating the $4.11 that analysts had predicted. This growth is being fueled by data centers buying high-capacity hard drives to store the massive amounts of information needed for artificial intelligence.
Management also raised the quarterly dividend to $0.175 per share, showing confidence in the company's ability to generate cash. While the stock fell about 6 percent today alongside a broader drop in chip stocks, the underlying business is performing well. Profit margins reached 58 percent, which is above the company's own targets and suggests it has strong pricing power in the data center market.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
Western Digital is scheduled to report its latest quarterly results later today. Analysts are looking for revenue of about 4.14 billion dollars and earnings of 4.11 dollars per share. The company has a long streak of beating these targets, having topped expectations in each of its last eight quarters. The most important numbers to watch will be the profit margins on its high-capacity hard drives. These drives are essential for storing the massive amounts of data used in artificial intelligence, and the company needs to show it can maintain high prices for this specialized hardware even as it spends more to build it.
Management has beaten its own targets for eight straight quarters. The business is currently outrunning even the most bullish forecasts as AI infrastructure needs grow faster than analysts can model.
| Expectation | |
|---|---|
| EPS | $5.88 |
| Revenue | $5.13B |
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