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Investing.com -- Western Digital Corporation (NASDAQ:WDC) hosted its Investor Day in New York on Tuesday, where the company discussed its strategic direction, financial targets, and technological advancements, particularly in the area of high-capacity nearline hard disk drives (HDDs) and the impact of AI on storage demand.
Commenting on the event, JPMorgan analysts noted that Western Digital remains well-positioned for long-term revenue growth with stable margins, driven by strong demand for exabyte HDD storage from cloud and hyperscale customers.
The company's focus on industry-leading total cost of ownership (TCO) for its cloud customers was highlighted, along with a pipeline of customer engagements and long-term agreements that secure demand visibility.
Western Digital recently launched its 32TB ePMR HDD and is on track to qualify its 28TB CMR and 36TB UltraSMR solutions by the first half of 2026.
Furthermore, the company is testing its next-generation Heat-Assisted Magnetic Recording (HAMR) technology, with volume shipments expected in the first half of 2027.
At the analyst day, WDC outlined its baseline financial targets for the next three to five years, aiming for mid- to high-single-digit revenue growth from 2024 levels, with a gross margin of 38% and an operating margin of 24%.
It has also committed to returning 100% of excess cash to shareholders through dividends and repurchases after reaching its net leverage targets.
“WDC has optimized its manufacturing footprint and continues to see a mix shift tailwind towards higher-value nearline solutions, which should structurally augment its gross margin profile moving forward,” JPMorgan analysts said.
“Overall, the team struck an optimistic tone and HDD continues to perform well, driven by strong demand for high-capacity nearline HDD drives with robust demand visibility from hyperscaler/ cloud customers,” they added.
Mizuho (NYSE:MFG) analysts echoed this sentiment, pointing out the role of AI in expanding the total addressable market (TAM) and the successful ramp-up of UltraSMR technology, now constituting 30% of shipments.
The investment bank reiterated its Outperform rating on WDC shares, with a price target of $82.
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