Western Digital (WDC) shares are trading higher this after the company posted strong results for the March quarter, triggering a pair of analyst upgrades.
After the close yesterday, the disk-drive maker reported revenue for its fiscal Q3 of $2.6 billion and profits of $1.71 a share, ahead of the Street at $2.54 billion and $1.54 a share. For Q4, the company is forecasting profits of $1.40-$1.50 a share, ahead of the old Street consensus of $1.36.
- Stifel Nicolas analyst Aaron Rakers this morning upped his rating on the shares to Buy from Hold, setting a target price of $53. Rakers writes that the upgrade reflects his view that hard-disk drive demand dynamics “will remain robust throughout 2010 and potentially well into 2011.” He thinks the industry can sustain a rational supply/demand and competitive landscape going forward – something that has not always been the case in the past in the drive industry. He notes that his price target represents an 8x multiple on his FY 2011 estimate of $6.31 a share.
- Baird analyst Jayson Noland this morning upped his rating on the stock to Outperform from Neutral, with a new price target of $50, up from $48. “We recognize this call could be viewed as early in the year given seasonality, but we see no reason to wait given valuation, abnormally low inventory levels, a rational competitive environment and a positive second half demand outlook,” he writes.
WDC is up $3.50, or 8.6%, to $44.18.
Meanwhile, Seagate (STX) shares are up 81 cents, or 4.1%, to $20.50.
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