Benchmark downgrades Western Digital on growing FY25 concerns

Investing.com -- Benchmark analysts cut Western Digital Corp (NASDAQ:WDC ). to Hold on Thursday, citing mounting challenges that could impact the company’s fiscal 2025 performance. 

The firm highlights softening NAND pricing, weaker demand, and a shrinking market share as key concerns.

“We see a growing number of concerns for Western Digital,” Benchmark stated, pointing to “softening NAND pricing driven by customer inventory adjustments in consumer markets” and ongoing slowness in industrial and automotive NAND demand. 

These pressures have led the firm to lower its FY25 forecast from $8.16 to $7.57 in non-GAAP net income per diluted share, with expected sales reduced from $17.4 billion to $16.7 billion.

“At a recent investor conference, CEO David Goeckeler indicated the firm was seeing more pricing headwinds than previously anticipated with these headwinds expected to continue in the next quarter,” said Benchmark.

Compounding these issues is weak guidance from competitor Micron Technology (NASDAQ:MU ), which recently reported a sequential decline in NAND average selling prices (ASPs) and forecast lower-than-expected bit shipments for its fiscal second quarter of 2025, explains the firm.

They believe Micron’s guidance reflects broader industry challenges. The company’s projected fiscal Q2 EPS range of $1.33 to $1.53 fell short of the consensus estimate of $1.97, and its sales forecast of $7.7 billion to $8.1 billion was well below expectations of $8.97 billion. 

Additionally, Micron anticipates its NAND inventories will increase despite supply and capital expenditure reductions.

Western Digital’s market share has also suffered, declining from the mid-teens to 10.5% over the past three quarters. Benchmark attributes this drop to the company’s concentration in consumer markets, which Micron does not expect to recover until late 2025.

With these challenges in mind, Benchmark has adopted a more cautious stance, stating, “Growing FY25 concerns take us to Hold.”

 

Source: Investing.com