Western Digital Faces 'Challenging Pricing Environment,' But There's Long-Term Potential: Analysts

Core Insights - Western Digital Corp has been rerated by analysts following updates on its fourth-quarter results and the announcement of its CFO's retirement [1][4] - The company expects second-quarter fiscal 2025 revenues to fall within the range of $4.20 billion to $4.40 billion, with adjusted EPS anticipated at the lower end of $1.75 to $2.05 due to a challenging pricing environment in NAND [3][8] Company Updates - CFO Wissam Jabre will retire effective February 28, with plans for a new CFO search post-separation of the Flash and HDD businesses [1][4] - Jabre is expected to remain as CFO of the HDD business after the split, with Irving Tan as CEO [2] Financial Performance - The fourth-quarter results indicate revenue at the mid-point of guidance and EPS at the low end of the previous range [4] - Analysts project second-quarter revenue of approximately $4.18 billion and EPS of $1.72, with some estimates as high as $4.25 billion and $1.75 [7][13] Market Conditions - The pricing environment for NAND is more challenging than previously expected, attributed to elevated inventory levels and sluggish demand in various sectors [9][13] - Analysts expect a recovery in NAND pricing and demand trends by the September quarter as excess inventory is reduced [10][13] Analyst Ratings - Cantor Fitzgerald maintains an Overweight rating with a price target of $95, while Barclays lowered its target from $90 to $80 [11] - BofA raised its price target to $84 from $80, and Morgan Stanley maintains a Buy rating with a target of $93 [11] Future Outlook - The demand for storage is expected to increase due to strong AI compute infrastructure needs, providing a favorable backdrop for long-term growth [12] - Analysts anticipate a recovery in consumer and cyclical segments of the market in the latter half of 2025 [13]