WDC, NAND, NVM, enterprise storage systems, etc. Message Board

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Technology Stocks : WDC, NAND, NVM, enterprise storage systems, etc.

SNDK 220.51

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Nov 25 3:59 PM EST

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From: dan.rosengold	1/4/2018 6:56:17 AM
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06:24 Western Digital rating change at BMO Capital Western Digital cut to Market Perform at BMO Capital on balanced supply-demand. As reported earlier, BMO Capital analyst Tim Long downgraded Western Digital to Market Perform from Outperform and lowered his price target on the stock to $85 from $120. Long says the near-term fundamentals for the company remain healthy, but limited upside for growth in margins and revenue due to a more balanced supply-demand will keep the stock in a trading range. Long also anticipates hard disk drives to remain in decline with 7% less units sold this year in the industry, following a 6% drop last year. The analyst says his new price target is based on 6.5-times FY18 estimate valuation, in line with the recent trend of 6-to-8 times consensus. More: In making the downgrade, BMO said its neutral view on Western Digital's stock is based on three factors, the first being that after a strong calendar 2017, the "supply-demand balance for NAND is on the 6-12 month horizon." The firm said it expects the average selling price to begin eroding, pressuring NAND revenue growth and corporate gross margins into fiscal 2019. The second factor is that Western Digital "no longer trades like a pure hardware company, and is subject to memory cycle sentiment," BMO said. The third factor is the firm's expectations that magnetic storage, which makes up half of Western Digital's revenue, faces continued secular declines. "We model all major end markets except capacity enterprise to keep shrinking," BMO said.

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