NEW YORK (TheStreet) -- Wells Fargo initiated coverage on Western Digital Corp. (WDC) - Get Western Digital Corporation Report this morning with an "outperform" rating and a $100-$110 valuation range.

Western Digital is a computer data storage company that makes hard disk drives. Wells Fargo acknowledges that the company is in a potentially risky market, but says Western Digital has managed to navigate it well.

The firm believes that Western Digital will potentially be able to benefit after China's Ministry of Commerce (MOFCOM) allows the total acquisition of Hitachi. The acquisition was approved in 2012, but MOFCOM has not allowed them to fully integrate.

Still, Wells Fargo says Western Digital has the potential for strategic flexibility and a "history of strong execution."

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Shares of Western Digital were up 3.47% to $81.36 at close on Thursday.

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 a number of strengths, 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 and expanding profit margins. We feel its 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 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 36.98% 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 6.89% significantly trails the industry average.
  • WESTERN DIGITAL CORP's earnings per share declined by 28.8% in the most recent quarter compared to the same quarter a year ago. 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 $6.17 versus $6.69 in the prior year. This year, the market expects an improvement in earnings ($6.95 versus $6.17).
  • The revenue fell significantly faster than the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 12.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of WESTERN DIGITAL CORP has not done very well: it is down 20.41% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: WDC Ratings Report