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Western Digital Ties Up With Veeam to Expand Flash Portfolio

Zacks Equity Research

Western Digital WDC recently announced collaboration with Veeam in an effort to develop joint solution that integrates Veeam Universal Storage API with IntelliFlash all-flash arrays Plug-in family.

The new solution enables customers to leverage advance capabilities of Veeam Suite. The new solutions drive efficiency, improve performance, and optimize the total cost of ownership (TCO). Users can effectively access, transform, capture and preserve data in innovative ways. This combination is expected to deliver robust storage solutions to accelerate enterprise applications on cloud platforms.

Emerging applications including the likes of AI, IoT, and machine learning (ML) tools call for a robust storage system. With the new solutions, the company attempts to meet these requirements.

The joint solution is anticipated tooffer high-performance cost-effective NVMe-based flash storage platform. Moreover, with the latest integration of IntelliFlash Storage Snapshot Plug-in for Veeam, Western Digital aims to enhance overall drive capacity, reliability and performance.

Further, Western Digital’s ActiveScale system will be integrated with Veeam Cloud Tier to provide fast, cost-effective system support architecture enabling customers to store petabytes (PB) of data, consequently improving data center space efficiency.

The new enhancements to its IntelliFlash storage portfolio are likely to aid the company in strengthening market position against the likes of Seagate STX.  Notably, shares of Western Digital have gained 11.2% on a year-to-date basis, substantially outperforming the industry’s rally of 4.8%.

Analyzing Market Opportunities

Per ResearchAndMarkets data, the global data center storage market is envisioned to increase at a CAGR of 11.8% from 2018 through 2022. Per MarketsandMarkets report, the non-volatile memory market is projected to witness a CAGR of 9.5% from 2017 to reach approximately $82 billion by 2022. Per Technavio research report, the global enterprise SSD controller market is forecasted to witness a CAGR of around 26% from 2018 to 2022.

The aforementioned reports reflect robust demand for storage systems across various levels, strengthening the prospects of the newly offered solutions.

Growth Prospects

Anticipating a potential acceleration in cloud deployments, Western Digital is also investing heavily to deliver high-capacity storage devices that will support expansion of cloud infrastructure and cloud applications.

The company had also expanded its data center solutions portfolio. The company unveiled new ActiveScale5.3 object storage system, Ultrastar Serv60+8 hybrid storage server platform and new enhancements to its IntelliFlash N Series family.

Western Digital is focusing more on the enterprise side, which is the key growth area in the information technology sector. Apart from this, the focus shift toward enterprise is likely to reduce the company’s dependence on the PC market and help in improvising margins.

Our Take

Western Digital is making every effort to ensure its products deliver high quality storage solutions across all emerging data-driven technologies. We believe this ongoing expansion of product portfolio bodes well for the top line.

However, uncertain macroeconomic environment, declining trend in PC shipments and softness in NAND flash pricing trends are hindering the company’s growth prospects.

Ballooning debt levels have also been plaguing Western Digital for quite some time now.  The company also faces stiff competition from Hitachi, Samsung and Intel in the storage market which adds to woes.

Zacks Rank and Stocks to Consider

Western Digitalcarries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader technology sector are Match Group, Inc. MTCH and Autohome Inc. ATHM, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Match Group and Autohome have a long-term earnings growth rate of 15.2% and 20.9%, respectively.

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