Shares of Lake Forest’s Western Digital Corp. jumped Monday after an analyst said he’s expecting the disk drive maker to rebound later in the year.
The stock closed up 6% on a recent market value of about $3 billion.
Needham & Co. analyst Richard Kugele said the company’s been able to avoid cutting prices on one of its most popular disk drives and that its inventory levels are in good shape.
“With balance sheet inventory the lowest in five quarters and no channel inventory, we believe we are setting the stage for the rebound in the hard disk drive group in the March or April time frame,” he said in a note to clients.
Kugele said Western Digital successfully boosted the price of its 500 gigabyte disk drives to about $55, up from $50 in the past month or so.
The increases help pad Western Digital’s profit margins as it faces slowing demand in an industry known for profit-killing price wars in times of oversupply.
“Pricing increases have continued to stick and have been followed with further raises,” Kugele said.
In December, Western Digital said it’s cutting some 2,500 jobs and slashing executive pay in a bid to offset slumping demand.
It also halted production for two weeks in a bid to avoid a glut of products.
