As previously reported, Goldman Sachs upgraded Western Digital to Neutral from Sell with a price target of $48, up from $31, citing improving NAND supply/demand, a cyclical recovery in the nearline HDD market and the introduction of a sum-of-the-parts component to the firm’s valuation framework after Western management concluded that spinning off its NAND business would be the best, executable option as it looks to unlock value. While still concerned that the cyclical upturn in NAND “could be short-lived and/or underwhelming in magnitude relative to DRAM,” the firm believes the combination of supply-side adjustments and normalizing demand will drive a positive earnings estimate revision cycle over the coming quarters, the analyst added.
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