150 Target, wow!
Brean Capital reiterated a Buy rating and $150.00 price target on Western Digital Corp. (NASDAQ: WDC) following June quarters results. WDC reported June quarter revenue and EPS of $3.19B and $1.51 vs. Street of $3.25B and $1.45. Management guided September quarter revenue and EPS guidance of $3.2B 3.3B and $1.50 to $1.60,..
If the shares can't be borrowed, they would do naked shorting, which is even worse. Shorting does bring the price down in the short term, but all those those shares shorted will have be covered which usually provides a support and then exaggerates the move up. If you are a long term holder, it makes no difference - except the volatility. If you sell in panic because of aggressive short selling then they take money out of your pocket. If you buy when they sell and sell when they cover, you take the money out of their pocket.
if we close over 87.50, we will get to 89. I think all short positions are already taken today and if stock close over 87.50, most shorts will unwind the position.
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Longbow: ‘Great Execution' Supports Owning Western Digital
Joe Wittine of Longbow Research maintained a Buy rating on shares of Western Digital Corp (NASDAQ: WDC) with a $100 price target as the company defended its profit margins "very well" amid an "awful" quarter for the HDD TAM which came in at 111 million units, missing the 125 million units originally expected.
The analyst concluded that Western Digital's enterprise mix is "gaining steam" and the "worst is behind" for PCs for now. In addition, the stock is "inexpensive" at 11x his fiscal 2017 forecast, or 9-10x if assuming a $1.50 plus of MOFCON synergies, which is expected to ramp over the next two to four quarters post a decision.
The decreases by the various analysts have all lowered their prices to a level which is still 20-30% above present price levels. What kind of fools game is this? The driving factor over the next few days will be the shorts betting heavily that the 10% gain today will not hold up. I am for regulation that does not allow borrowing shares from others to play the short game. .
In a way, the delay has caused them to trim down even more in other ways than they would have done otherwise. Looking back, last few months' relentless sell-off may also have something to do with the "premium" coming out after the CEO sounded discouraged by the progress as opposed to significantly upbeat assessment yesterday. So perhaps we will build back the premium in to the stock price once again. In about 2 quarters, the approval better come or we will lose this back.
Dramatic trade WDC proved to be… Almost lost it all but thanks to Ultimate Stock Alerts (search Google for them) I walked away with something
Most shorts won't understand why the stock is popping so hard. But on the CC, they said the end of MOFCOM mandated hold-separate would trim SG&A a minimum of $400Mill/yr BEFORE additional synergies are realized throughout the supply chain (their vertical infrastructure).
That equates to about a $2.00/shr increase in EPS/yr. At a miserly 10x P/E, that increases the share price by $20.
Hard drive companies are some of the most oversold stocks on the index. WDC had sustained a forward P/E of 5-7 for years up until 2013. They seem to maintain low valuations for long periods of time, probably because retail investors are constantly buying FB, NFLX, CMG, SHAK. Still a great deal at current valuations, regardless of what happens this coming quarter, or even year. Humans have an appetite for data storage that exceeds their appetite for energy. Never sell, always add, to positions in WDC (and STX).
Sentiment: Strong Buy
I think he is trying to say the market metrics are downright hideous:
1) The overall HDD market (-20%) is dropping worse than the overall PC market
2) The PC HDD volume is yet far worse than even that (-32% !)
3) The Entreprise & Sotrage market is not saving the day (-11% drop and still only about 40% of total HDD volume shipped)
Conclusion there is more to the story than just the drop in the PC market, and I for one know what it is: SSDs.
And what is this management doing ? Cutting costs all the ay down to - eventual - oblivion, in order to present a decent profit level and margin. Instead of waking up and build a new future for themselves.
The guidance was almost exactly flat q-to-q to slightly better. We know WDC is generally conservative. Let's hope STX does not foul the pool next.
But this is what Milligan said about MOFCOM:
"I would like to comment on the status of our discussions with China’s Ministry of Commerce. Since our last earnings call, we believe we have made meaningful progress. We have met with MOFCOM several times to discuss their review process and a potential timetable for them to complete their work. We have submitted a comprehensive report on the current market, which we believe shows that the storage ecosystem has evolved significantly in the last 3 years and that lifting the hold separate restriction will enhance competition, increase innovation and benefit customers. We have also met with several other stakeholders in China and shared our views on the benefits of lifting the hold separate. Based on our conversations with MOFCOM, we believe that they are working steadily on several fronts and we are hopeful that they can conclude their evaluation of our application to lift the hold separate in the near future."
This statement is considerably more positive than the frustrated diatribe unleashed last qtr. Sounds like he is making nice with the Chinese.
Easy answer is that it had been oversold in the last few months. You're seeing one of only 3 participants in the industry perform well in a challenging environment. Expectations were handily beaten. Unless you believe the industry is going the way of the Dodo, you should think about the terms "moat" , "dividend", "management", "enterprise", "storage solutions", "storage demand projection", etc.
Not short, were you?
Deal. You buy the coldies and the contest organizer/promoter gets to siphon off some of the spoils... Don King would be proud.
Not sure if Nostramcra want to give up the belt, though.
My elementary school times-table looked like that! If you're trying to make a point, could you please make it clear enough so old surfers with wipeout-induced CTE don't have to think so hard? There may be another one out there who would also thank you...