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Western Digital Corporation Downgraded to Hold at Deutsche Bank
Sep 20, 2022 9:58 PM - Davit Kirakosyan
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Deutsche Bank analysts downgraded Western Digital Corporation (NASDAQ:WDC) to hold from buy and lowered their price target to $40 from $56.
The analysts believe the company's Q1 revenue and EPS are tracking below the low end of guidance, and the Q2 outlook is also likely to be meaningfully below current Street estimates. According to the analysts, it is quite possible that, over the next few quarters, the company will re-test the trough margin (operating margin of 4%) and EPS ($0.17) reached in Q2/19.
Of particular concern to the analysts is that the company now expects its free cash flow to be negative in fiscal 2023. While the analysts do not see a significant downside to the current share price given the stock is trading at approximately 1.0x EV/Sales, the analysts don’t see any meaningful upside in the near term as oversupply in the flash memory market persists and macro concerns escalate.
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