RW Baird Was Right About Western Digital

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions worldwide. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for computing devices, such as desktop and notebook PCs, security surveillance systems, gaming consoles, and set top boxes; flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, IoT, industrial, and connected home applications; flash-based memory wafers; and embedded storage solutions and iNAND embedded flash products, such as multi-chip package solutions.

RW Baird analyst Tristan Gerra downgraded the stock to underperform from neutral with a price target of $40.

In a research note to clients, Gerra cited “increasing disconnect between significant stock appreciation and continued deterioration in NAND flash fundamentals, along with recent HDD TAM reduction.”

His downgrade stands in sharp contrast to some of his Wall Street colleagues, who earlier this month upgraded their outlooks for Western Digital.

Deutsche Bank analyst Sidney Ho earlier this month upgraded the company to buy from hold and raised his price target to $60 from $45 a share. The day before Ho’s upgrade, Longbow analyst Nikolay Todorov upgraded his rating on Western General to buy from neutral with a $65 price target.


Western Digital Corp. reported quarterly results that fell below Wall Street estimates yesterday. The company reported a fiscal third-quarter loss of $581 million, or $1.99 a share, compared with $61 million, or 20 cents a share, in the year-ago period. Revenue fell to $3.67 billion from $5.01 billion in the year-ago quarter vs. expectations of 46 cents a share on revenue of $3.68 billion.

Steve Milligan, chief executive officer of Western Digital said the market conditions were consistent with their expectations, but they are starting their indicator are now starting to show improving trends.

I’m not sure this was hard to see.  Taiwan Semiconductor Mfg. Co. Ltd. and Texas Instruments recently reported YoY (year-over-year) revenue falls after 11 quarters of growth.  Last week, Intel reported first-quarter earnings and reported their first annual profit decline since 2015.

So where is Western Digital’s stock price heading next, lets go to the charts?

Monthly Chart (Curve Timeframe) – monthly supply is at $83 and monthly demand is at $23.

Weekly Chart (Trend Timeframe) – the trend is down.

Daily Chart (Entry) – the chart suggests to go short if and when price pulls back to the daily supply at $59 or $65.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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