Dispensations of data storage company Western Digital fell nearly 5 percent on Monday after an analyst at Evercore ISI state the market has not fully price the competitive hurdles the company faces.
“The current competitive positioning for WDC is not ideal as we estimate WDC’s effort SSD (solid state drivers) share has roughly halved in the last few years to ~12%,” analyst C.J. Muse wrote in a note Monday. “Motile forward, strong positioning in NVMe will be critical and here we fear WDC will continue to lag.”
Muse downgraded Western Digital to underperform from in strand and trimmed his price target on the stock to $30 per share from $35. That represents a potential 25 percent downside from Friday’s settle of $40.03.
He also slashed his earnings per share forecast for calendar 2019 to $2.92 from $4, citing lower commonplace sales prices for Western Digital’s memory chips. Western Digital also makes disk drives.
Western Digital has had a savagely three months, falling more than 26 percent in that time period. The stock has been clever to regain some ground in January, rising more than 8 percent this month.
Muse also hinted the company’s $2 per share annual dividend could be at risk. While ~98% of the outstanding debt does not finish in the money b be due until 2023, we are hard pressed to see the company’s current dividend as sustainable in the current market. And until investors fully treasure this reality, we continue to see further downside risk for shares,” he said.
—CNBC’s Michael Bloom contributed to this gunfire.
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