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Western Digital Corp WDC Stock Quote

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Morningstar‘s Stock Analysis WDC

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Western Digital Facing Two-Sided Woes in Weak Fiscal 2023, Lower FVE to $50

Analyst Note

| William Kerwin |

We lower our fair value estimate for no-moat Western Digital to $50 per share, from $60, in response to poorer expectations for fiscal 2023. We'd been forecasting fiscal 2023 to be a downcycle in both the hard disk drive (HDD) and flash markets, but we now expect it to be a more harsh environment, on both pricing and volume. WD is experiencing lower demand from cloud customers for its HDDs, and flash pricing is cratering amid a glut of supply caused by demand reduction. This is the perfect storm for Western Digital. Its strategy to pursue both the HDD and flash storage markets gave it higher growth potential, but increased its vulnerability to cyclicality and heightened capital intensity that in our view erodes its chance at an economic moat. Shares were flat in early market trading, which may indicate that most of WD's downcycle risk is priced in. When considering its long-term opportunity, we view Western Digital as undervalued, but reiterate our High uncertainty rating.

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Key Statistics WDC

Company Profile WDC

Business Description

Western Digital is a leading vertically integrated supplier of data storage solutions, spanning both hard disk drives and solid-state drives. In the HDD market it forms a practical duopoly with Seagate, and it is the largest global producer of NAND flash chips for SSDs in a joint venture with competitor Kioxia.

5601 Great Oaks Parkway
San Jose, CA, 95119
T +1 408 717-6000
Industry Computer Hardware
Most Recent Earnings Sep 30, 2022
Fiscal Year End Jul 1, 2023
Employees 65,000

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