According to 5-star analyst, Western Digital (WDC) is our “best COVID-19 recovery idea”

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Long-term investors of the data storage specialist Western Digital (WDC) are accustomed to volatility attacks. After the sharp decline in the share price in 2018, the 2019 share price rose 74% bullish. But along with most of the market, 2020 hasn’t been a pretty picture yet, and Western Digital’s shares have dropped nearly 40% since the beginning of the year. “Data-reactid =” 12 “> Long-term investors from data storage specialists Western Digital (WDC) are accustomed to volatility attacks. After the sharp decline in the share price in 2018, the 2019 share price rose 74% bullish. But along with most of the market, 2020 hasn’t been a pretty picture yet, and Western Digital stocks have dropped nearly 40% since the beginning of the year.

In fact, Western Digital has even underperformed other companies since Coronavirus decimated the market. This is precisely why the 5-star analyst at Deutsche Bank, Sidney Ho, calls Western Digital his “favorite idea for COVID recovery”.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Ho repeated a purchase from WDC along with a target price of 60 USD. The upward trend from the current level is a solid 57%. (To see Ho's track record, click here) “data-reactid =” 14 “> Ho repeated a purchase from WDC with a target price of $ 60. The upward trend from the current level is a solid 57%. (To see Ho’s track record, click here)

Investors have raised concerns about the company’s outlook. The focus was on how the reduced purchasing power of consumers could affect the sale of WDC products and how government mandates in Southeast Asia, where WDC has multiple manufacturing facilities, could affect the supply chain. A highly indebted balance sheet also appears risky if the expected improvement in earnings potential does not have any effect.

Ho agrees that “consumer spending will suffer in the current environment,” he believes, “there are a few strengths that appear to be beneficial to WDC”.

<p class = "Screen Atom Screen Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "A low exposure to smartphone sales is one and one another reason is the shift to homework and the rise of virtual classes, both of which have proven beneficial in the high demand for data centers – 35-40% of WDC's sales are tied to companies, the majority of which are tied to data centers – and the PC market. Notebooks have developed particularly well due to a mix of corporate and personal demand. Another push is the upcoming upgrade to game consoles. The new consoles are being switched to SSDs, unlike the current HDD-based platforms, no longer shipped to the WDC.“data-reactid =” 26 “> Low exposure to smartphone sales is one and another is the shift to homework and the rise of virtual classes. These events have proven beneficial to both the high demand for data centers – 35-40 %. WDC’s sales are tied to companies, the majority of which are tied to the data center and PC market. Notebooks have performed particularly well due to a mix of corporate and personal demand. Another boost is the upcoming upgrade to The new consoles will be switched to SSDs, in contrast to the current HDD-based platforms, to which WDC will no longer be delivered.

Ho summarized: “In an uncertain environment, investors are particularly concerned and skeptical of companies that are considered raw materials and companies with high levels of debt … With the current valuation of ~ 5.2x CY21E EPS and ~ 4.2x EV-to -EBITDA, we see the risk reward as extremely attractive, even if there are downside risks, and when the market begins to recover from the pandemic, we see an oversized reward for owning the shares. “

Most of the street agrees with Ho. The data storage specialist’s strong buy consensus rating is based on 16 purchases and 3 holds. The average price target is higher than that of Ho and could mean an upward trend of 101% at $ 76.59. (See Western Digital stock analysis on TipRanks)

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To find good ideas for trading technology stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all the insights into TipRanks’ stocks.“data-reactid =” 38 “>To find good ideas for trading technology stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all the insights into TipRanks’ stocks.

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