Data storage company Western Digital (NASDAQ:WDC) has delivered better-than-anticipated first-quarter numbers. Additionally, its Board has approved a plan to split WDC into two separate businesses: HDD and Flash.
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The plan to split WDC’s HDD and Flash businesses into two public companies is keeping investor sentiment in the stock buoyant today. This move is expected to better position each business for growth and operational efficiency, with distinct capital structures.
David Goeckeler, the CEO of Western Digital, commented, “Our HDD and Flash businesses are both well positioned to capitalize on the data storage industry’s significant market dynamics, and as separate companies, each will have the strategic focus and resources to pursue opportunities in their respective fields.”
Of note, WDC expects the market environment in both HDD and Flash to improve in Fiscal 2024. The company aims to execute the separation in H2 2024.
During the quarter, revenue declined by 26.5% year-over-year to $2.75 billion. Still, the figure landed better than estimates by $90 million. In sync, EPS of -$1.76 came in narrower than expectations by $0.15. The quarter was characterized by weakness in WDC’s Cloud vertical but showed sequentially robust double-digit gains in its Client and Consumer end markets.
Looking ahead to the second quarter, WDC anticipates revenue to be in the range of $2.85 billion and $3.05 billion. Diluted EPS for the quarter is expected to hover between -$1.35 and -$1.05.
What Is the Target Price for WDC?
Overall, the Street has a Moderate Buy consensus rating on Western Digital. The average WDC price target of $46.87 implies a 20.3% potential upside.
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