Analyst Sidney Ho also raised his price target to $60 from $45 a share. He said in a note to investors that he was starting to see "favorable data points" in both HDD (hard disc drive) and NAND that will support a solid second half recovery for the company's earnings.
"While we acknowledge there is downside risk to near-term EPS due to weaker-than-expected NAND pricing - and hence we lower our near-term EPS estimates -supply cuts across the NAND industry, along with a re-acceleration of nearline HDD demand, will likely lead to a strong-er recovery off a lower base in 1H CY19," Ho said.
Ho added that "as earnings power starts to normalize and with upside risks for earnings revisions for 2H CY19 and CY20, the setup is favorable, in our view."
This was the second upgrade for Western Digital in as many days. On Monday, Longbow analyst Nikolay Todorov upgraded his rating on Western General to buy from neutral with a $65 price target. He said that he believes NAND fundamentals are bottoming and "there is a line of sight to cyclical recovery."
Among other things, Todorov said that he expects Western Digital will see a recovery in both gross margins and hard-drive revenue during the second half of the year.
Western Digital is scheduled to announce its thir- quarter results after the market closes on April 29.