NEW YORK (TheStreet) -- Shares of Western Digital Corp. (WDC - Get Report) are up 1.91% to $100.60 in pre-market trading on Wednesday following a ratings upgrade to "outperform" from "neutral" at Robert Baird.
The firm raised its rating and increased its price target to $120 from $95 on the storage solutions developer and manufacturer, due to the company's "solid traction" with the Hyperscale Cloud.
Separately, TheStreet Ratings team rates WESTERN DIGITAL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WESTERN DIGITAL CORP (WDC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Although WDC's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. To add to this, WDC has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- 37.35% is the gross profit margin for WESTERN DIGITAL CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WDC's net profit margin of 10.12% significantly trails the industry average.
- Compared to its closing price of one year ago, WDC's share price has jumped by 41.91%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- WESTERN DIGITAL CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WESTERN DIGITAL CORP reported lower earnings of $3.90 versus $6.45 in the prior year. This year, the market expects an improvement in earnings ($7.97 versus $3.90).
- WDC, with its decline in revenue, slightly underperformed the industry average of 2.4%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: WDC Ratings Report