TD Cowen Adjusts Price Target#

TD Cowen has raised its price target for Western Digital Corp. (NASDAQ: WDC) shares from $325 to $500 while maintaining a Buy rating. Currently, the stock trades at $434.52, with a market capitalization of $147.32 billion. Over the past year, Western Digital has seen an impressive return of 893%.

Earnings and Market Response#

The firm noted that Western Digital's guidance for the June quarter was 18% above market expectations. However, the stock experienced a decline in after-hours trading. TD Cowen attributed this drop to a slowdown in gross margin growth, which is expected to decrease from 90% in the March quarter to between 60-65% in June. In comparison, Seagate Technology has projected an 80% gross margin.

Pricing Trends#

In the March quarter, Western Digital reported a 7% increase in average selling prices (ASP) compared to the previous quarter and a 9% increase year-over-year. For the June quarter, ASP growth is expected to normalize to about 2% quarter-over-quarter and 11% year-over-year. The stock had previously risen around 10% following Seagate's report earlier in the week.

Future Outlook#

TD Cowen remains optimistic about Western Digital's pricing strategy, which aims for mid-to-high single-digit year-over-year growth. The firm also mentioned that Western Digital may have locked in some sales at fixed prices for the June quarter, potentially affecting its gross margins. Looking ahead, TD Cowen projects earnings per share of $21 for the calendar year 2027, based on an 8% year-over-year ASP growth, with potential for even higher earnings if pricing increases reach double digits.

Recent Financial Performance#

Western Digital recently reported strong financial results for the third quarter of fiscal year 2026, exceeding expectations with earnings per share of $2.72, surpassing the forecast of $2.36. The company also achieved revenue of $3.34 billion, exceeding the anticipated $3.23 billion. These results underscore Western Digital's solid performance, providing valuable insights for investors and stakeholders.