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Western Digital Q2 Results Top Estimates; Issues Guidance

Western Digital (WDC) delivered better-than-expected Fiscal Q2 2022 results that exceeded guidance amid ongoing supply chain disruptions. Revenue and earnings topped consensus estimates, supported by robust cloud revenue growth. WDC shares fell 1.36% to close at $53.84 on January 27.

Western Digital is a U.S.-based company that designs, manufactures, and sells data storage devices and solutions.

Q2 Results

Revenue in the quarter rose 23% year-over-year to $4.83 billion, exceeding consensus estimates of $4.24 billion. Cloud revenue increased 89% to $1.92 billion, but client revenue fell 1% year-over-year to 1.85 billion. Net income was up 242% year-over-year to $564 million. Non-GAAP earnings per share landed at $2.30, up 233% year-over-year exceeded consensus estimates of $1.86.

Amid the solid Fiscal second-quarter results, Chief Executive Officer David Goeckeler has warned of the potential impact of supply chain disruptions and COVID-related challenges in the third quarter. However, as the challenges subside, Western Digital should emerge in a stronger position and generate more value for shareholders, employees, and customers.

Western Digital generated cash flow of $666 million during the quarter and repaid $2.21 billion of debt. For the third quarter, management is projecting revenue of between $4.45 billion and $4.65 billion, with diluted earnings per share of between $1.50 and $1.80.

Stock Rating

Yesterday Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating with a $78 price target, implying 44.87% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 11 Buys and 3 Holds. The average Western Digital price target of $76.29 implies 41.70% upside potential to current levels.

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