Goldman Sachs has begun coverage on Western Digital (WDC, Financial), assigning a Neutral rating and a price target of $70. The firm has taken a balanced outlook on the semiconductor capital equipment, storage, and foundry sectors in the U.S. Currently, the semiconductor capital equipment market is experiencing a mid-cycle phase, characterized by both positive and negative pressures that are maintaining relative stability in revenue across the industry.
Goldman Sachs anticipates the revenue will remain stable through 2026, with potential risks outweighing opportunities. Nevertheless, the firm identifies China as presenting more opportunities than challenges for companies within this sector. A key area of optimism is the hard-disk-drive market, with an expected recovery in NAND, a type of flash memory, projected to continue until 2026.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 20 analysts, the average target price for Western Digital Corp (WDC, Financial) is $60.55 with a high estimate of $80.00 and a low estimate of $40.00. The average target implies an downside of 6.32% from the current price of $64.64. More detailed estimate data can be found on the Western Digital Corp (WDC) Forecast page.
Based on the consensus recommendation from 26 brokerage firms, Western Digital Corp's (WDC, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Western Digital Corp (WDC, Financial) in one year is $23.33, suggesting a downside of 63.91% from the current price of $64.64. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Western Digital Corp (WDC) Summary page.
WDC Key Business Developments
Release Date: April 30, 2025
- Revenue: $2.3 billion, down 5% sequentially, up 31% year over year.
- Non-GAAP Gross Margin: 40.1%.
- Non-GAAP Earnings Per Share: $1.36.
- Free Cash Flow: $436 million.
- Cloud Revenue: $2.0 billion, representing 87% of total revenue, down 4% sequentially, up 38% year over year.
- Client Revenue: $137 million, representing 6% of total revenue, down 2% sequentially and year over year.
- Consumer Revenue: $150 million, representing 7% of total revenue, down 13% sequentially, down 4% year over year.
- Operating Expenses: $324 million, down sequentially.
- Operating Income: $596 million, up 85 basis points sequentially.
- Operating Margin: 26.0%, up 1.5 percentage points sequentially.
- Cash and Cash Equivalents: $3.5 billion.
- Gross Debt Outstanding: $7.4 billion.
- Inventory: $1.3 billion, representing 86 days of inventory.
- Net Leverage Ratio: 1.7 times.
- Operating Cash Flow: $508 million.
- Cash Capital Expenditures: $72 million.
- Quarterly Dividend: Initiating $0.10 per share.
- Fiscal Q4 Revenue Guidance: $2.45 billion, plus or minus $150 million.
- Fiscal Q4 Gross Margin Guidance: 40% to 41%.
- Fiscal Q4 Operating Expenses Guidance: $330 million to $340 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Western Digital Corp (WDC, Financial) reported strong financial results for the third fiscal quarter with revenue of $2.3 billion, a non-GAAP gross margin of 40.1%, and non-GAAP earnings per share of $1.36.
- The company successfully completed the planned separation of its Flash business, focusing on its core HDD operations.
- Western Digital Corp (WDC) initiated a quarterly dividend of $0.10 per share, reflecting confidence in its long-term cash-generating ability.
- The company has long-term agreements with two of its largest hyperscale customers, providing visibility into demand through the first half of calendar year 2026.
- Western Digital Corp (WDC) is on track with its HAMR technology milestones, working closely with two hyperscale customers and receiving positive feedback.
Negative Points
- Total revenue for the quarter was down 5% sequentially, despite being up 31% year over year.
- The current environment remains highly uncertain and volatile, driven by tariffs and global trade tensions, which could impact demand in certain segments.
- There is potential demand uncertainty in the enterprise, distribution, and retail segments due to the unpredictability of tariffs.
- Western Digital Corp (WDC) faces challenges in managing supply chain shifts and ensuring agility and resilience in the face of geopolitical uncertainties.
- The company anticipates an increase in operating expenses in the fiscal fourth quarter due to variable compensation, hiring, and increased investments in research and development.
