On Thursday, Mizuho Securities adjusted its outlook for Western Digital Corp. (NASDAQ:WDC), reducing the company's price target from $82.00 to $68.00. Despite the significant cut in the price target, the firm maintained its Outperform rating on the stock. According to InvestingPro data, Western Digital, with a market capitalization of $12.63 billion, is currently trading below its Fair Value, suggesting potential upside opportunity. The company maintains a GOOD Financial Health Score, reflecting its solid financial position.
The revision in the price target comes as Mizuho analyst Vijay Rakesh updates revenue and earnings per share (EPS) estimates for Western Digital. The forecast for the March quarter revenue and EPS was revised down from $3.85 billion and $1.05 to $2.50 billion and $1.25, respectively. This adjustment is notably lower than the consensus estimates, which were at $2.78 billion for revenue and $1.10 for EPS. InvestingPro data reveals that 4 analysts have recently revised their earnings estimates upward for the upcoming period, with analyst targets ranging from $38 to $100 per share.
Looking forward into the fiscal years, Mizuho has also modified its expectations. For fiscal year 2025, the revenue estimate was reduced from $16.3 billion to $9.61 billion, with EPS dropping from $6.06 to $4.41, again below the consensus of $11.0 billion in revenue and $5.14 in EPS. The forecast for fiscal year 2026 followed a similar trend, with revenue projections decreasing from $17.9 billion to $11.0 billion and EPS from $8.02 to $5.27, compared to a consensus of $11.2 billion in revenue and $5.61 in EPS.
Furthermore, the analyst's outlook for fiscal year 2027 was adjusted, with revenue estimates moving from $18.5 billion to $11.4 billion and EPS from $9.42 to $5.74. This estimate remains above the consensus, which predicts $9.87 billion in revenue and $5.61 in EPS.
Rakesh's report highlighted the ongoing developments at Western Digital, including the spin-off of SanDisk (SNDK), and the company's hard disk drive (HDD) technology advancements. The analyst noted that Western Digital's HDDs are scaling well with UltraSMR technology being adopted by key cloud service provider customers. Additionally, initial Heat-Assisted Magnetic Recording (HAMR) products are currently being sampled and are expected to launch by 2027. The company has demonstrated strong financial performance with $15.6 billion in revenue over the last twelve months and maintains a healthy current ratio of 1.99, indicating strong liquidity. Get deeper insights into Western Digital's financial health and growth prospects with a comprehensive Pro Research Report, available exclusively on InvestingPro.
Despite the lowered forecasts and price target, Mizuho's Outperform rating indicates the firm's belief that Western Digital's stock will continue to perform well relative to the market or its sector in the foreseeable future.
In other recent news, Western Digital Corp has completed the spinoff of its flash business into Sandisk Corporation, marking a significant restructuring move. The company has reclassified Sandisk's historical results as discontinued operations in its financial statements, providing preliminary unaudited financial information for investors. Additionally, Western Digital announced plans to redeem $1.8 billion in senior notes, a strategic decision aimed at optimizing its capital structure.
Analyst firms have weighed in on Western Digital's position within the industry. BofA Securities maintained a Buy rating with a $58 price target, citing confidence in the company's competitive positioning and its focus on technological advancements in the hard disk drive market. Meanwhile, Benchmark analysts have maintained a Hold rating, reflecting cautious optimism amid broader market trends influenced by competitors like Micron (NASDAQ:MU).
These developments come as Western Digital continues to navigate the dynamic landscape of the memory chip market, with a focus on enhancing its core technologies and managing its financial health.
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