New Trade for December 3rd, 2020

Stocks are steady this morning after the S&P 500 closed at another record high yesterday.  The Dow is currently less than 1% from its Nov. 24 all-time high close.  The AAII weekly Sentiment Survey reports current Sentiment as Extreme Bullishness, with 49.1% of investors Bullish on the stock market, compared to the average level of 38% of investors Bullish.  This is the highest level of Bullish sentiment rating in more than 3 years.  Let’s see where we go from here.

Today we’re highlighting a tech company that has weathered the test of time.  Although its share price was hurt badly by the pandemic, the stock is trading at a value and it looks like it’s ready to run. 



Computer hard disk drive manufacturer and data storage company Western Digital Corporation (WDC) recently announced a restructuring plan aimed at boosting growth and profit.  

 The company said it was aligning a $16.7 billion storage portfolio to position for growth, profitability and agility.  The restructuring will help it leverage “go-to-market and operational synergies” to address the broad storage needs of its customers.

Western Digital stock has struggled to gain traction in the past few years, partly due to the cyclical nature of its business and swings in memory chip prices.  The stock took a downward slide starting more than a year ago as prices for its memory chip splunged due to market saturation, as did its revenue and earnings growth.  WDC stock looked to be on the rebound, until the coronavirus pandemic and stock market correction halted its momentum.  

The company has been around a long time and survived several sharp tech-industry downturns over decades by reinventing itself.  It has worked its way up the ranks to become a leading supplier  of disk drives and flash-based memory chips.



Western Digital forecast fiscal second-quarter revenue to be in the range of $3.75 billion to $3.95 billion and non-GAAP earnings per share in the range of 40 cents to 60 cents.  That’s in-line with analyst expectations.  

David Goeckeler, Western Digital chief executive, addressed the company’s restructuring plan during the conference with analysts.

“Over the coming quarters, I believe we will continue to see the compelling benefits of this strategy,” he said.  “There are significant operational and go-to-market synergies with our integrated flash and disk drive portfolios, which are important competitive differentiators for Western Digital.”

Based on 20 analysts offering recommendations WDC is a rated Buy.  13 analysts rate the stock a Strong Buy, 2 give Moderate Buy ratings.  There are 5 Hold ratings and no Sell ratings.

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