Why Western Digital Stock Popped Today?
Sep 23, 2020 by InvestorDestination Team
Shares of Western Digital Corp (NASDAQ: WDC) popped almost 10% today. There is no news from the company except that it announced to separate its HDD and Flash businesses yesterday. However, that has triggered few analysts to upgrade their rating of Western Digital. Craig-Hallum analyst Christian Schwab raised his target price for western digital from $44 to $62/share and upgraded the stock from hold to buy.
The company changed its organizational structure, which is pretty standard. It has hired a new leadership to flash business and yet to appoint a leader for HDD business. One could argue that now the company has separate leadership and team to focus on both businesses. However, that is not what is exciting analysts. Analysts are expecting that this might be the first step in the company’s desire to spin off one of the units in the future.
In general, organizational changes are part of the new CEO’s strategic initiatives. The current CEO joined the company six months ago.
Despite remote-economy fueling a storage demand from cloud service and content providers, the current economic uncertainties cast shadows on near-term storage demand. However, the long-term demand for storage is strong. The company has diversified product portfolios and strong customer relationships. We do believe it is undervalued.
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