July 26 Western Digital Corp shares
soared 18 percent in premarket trading on Thursday, after the
hard-disk drive (HDD) maker handily beat analysts' estimates,
underlining a faster-than-expected recovery from the Thailand
floods that hit production last year.
Several analysts raised their price targets on the stock,
lauding the hard-disk drive (HDD) maker's ability to maintain
high gross margins even as production returns to normal levels.
Shortage of hard drives after flooding in Thailand led to a
spike in prices last year. But even as production returns to
normal levels, Western Digital and Seagate Technology Plc
have maintained their price premiums.
"Guidance clearly signals that, with the recent
consolidation of the industry, the company is focused on
prioritizing pricing/margins at the expense of market share
going forward, a departure from oversupply and irrational
pricing that has plagued the industry in the past," Citi
Research analyst Joe Yoo said.
Yoo upped his price target on the stock to $49 from $40.
Western Digital shares soared 18 percent in premarket
trading, while those of Seagate were up 10 percent.
"Western Digital benefited from an improved product mix from
its acquisition of Hitachi Global Storage Technologies, with
significant upside vs. street estimates from its enterprise
portfolio," Barclays analyst Ben Reitzes said.
Western Digital in 2011 unveiled a $4.3 billion deal to buy
Hitachi Ltd's hard drive business.
Barclays raised its price target on the stock to $38 from
$32. Three other brokerages also revised their price target.