| | Western Digital rises for second day as Citi maintains buy after Elliott calls for split
May 04, 2022 7:15 AM ET Western Digital Corporation (WDC) By: Chris Ciaccia, SA News Editor
Western Digital (NASDAQ: WDC) shares rose for a second day on Wednesday after activist investor Elliott Management called for the storage company to separate its hard-disk drive and flash businesses, with investment firm Citi maintaining its buy rating in light of the news.
Analyst Jim Suva, who has a per-share price target of $75 on Western Digital ( WDC), noted that the company is the firm's "top value technology stock" and has "several options" to unlock value for shareholders.
"We view Elliott's proposal as only one of several methods to unlock value, which could also be obtained via internal operations improvement, capital allocation, JV ownership resolution, etc.," Suva wrote in a note to clients.
Western Digital ( WDC) shares rose nearly 1% to $62.31 in premarket trading on Wednesday, following a 14.5% gain on Tuesday.
In addition, Suva noted that more is expected from Western Digital ( WDC) when it holds its investor day on May 10th in San Francisco.
On Tuesday, Elliott, which has invested $1 billion or a 6% stake in the company, said that Western Digital ( WDC) shares could reach $100 by the end of 2023, according to a statement.
In addition, the activist hedge fund said it would also invest $1 billion in the flash business at an enterprise value of $17 to $20 billion.
Western Digital ( WDC) responded to the news, saying it agrees shares are undervalued and will speak with with Elliott to discuss the fund's views.
“Western Digital maintains an ongoing dialogue with our shareholders and values constructive input on our business," the company said in the statement. "We agree that Western Digital is an excellent, yet undervalued, company with strong positions in our flash and HDD businesses and look forward to engaging with Elliott to discuss their views."
On Friday, Western Digital ( WDC) reported first-quarter results and several analysts said the stock offered "attractive risk-reward."
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