The shares advanced 5.3% to $57.20 after Susquehanna analyst Mehdi Hosseini said in a note that he saw rising demand and tighter supply ahead for some of the key NAND flash and other storage products manufactured by the San Jose, Calif., company.
The Susquehanna analyst, who rates the stock positive, sees a combination of factors leading to a tighter market -- and a favorable shift in the supply/demand equation -- for Western Digital's key products.
The 5G-build cycle should "start in earnest" in late March. This rise in demand, combined with "all the cuts to NAND capital expenditure and wafer starts," should "lead to a tight NAND-supply market by June," Hosseini wrote.
And the coming videogame-console upgrade cycle in 2020 could keep the market tight well into the second half of the year, he wrote.
New videogame consoles slated for release in second-half 2020 alone will "consume 4% to 6% of NAND bit capacity, further complicating the tight supply-demand dynamics," Hosseini noted.
"We actually don't rule out (real) "shortages" hitting the headlines by mid-summer!" the Susquehanna analyst wrote.
Western Digital's earnings bottomed in the September quarter at 34 cents a share, Hosseini contends.
Western Digital's quarterly earnings should rise to $1 a share in 2021 and then to $2 a share in 2022, according to the Susquehanna analyst.