Shares of Lake Forest’s Western Digital Corp., a maker of disk drives, slumped Friday after an analyst downgraded the stock on concerns about demand.
Investors sent the stock down nearly 4% in early afternoon New York trading on a recent market value of about $5 billion.
Collins Stewart Plc analyst Ashok Kumar cut rating to “hold” from “buy,” and said “a lack of demand could pressure shares in the summer,” according to an Associated Press report.
Analysts have been struggling to pinpoint indications of true demand.
Western Digital and other computer products makers have seen a slight uptick in orders since the start of the year, but it’s unclear if this is due to true demand improvement or manufacturers restocking inventory that has fallen to low levels.
Analyst Kumar lowered his price target to $18 per share, down from a previous target of $24 per share. Western Digital was trading at around $20 per share on Friday.
“The risk that there will be a lack of ensuing demand,the true driver of sales growth,could put pressure on the stock in coming months,” he said a note to clients.
The downgrade comes a day after Western Digital reported results for the March quarter that were down from a year ago but still beat Wall Street’s expectations.
It reported $1.6 billion in sales, down 24% from a year earlier and just beating analysts’ expected $1.5 billion in revenue.
Excluding charges for research and development, acquisitions and restructuring, the company posted profits of $68 million, down 76% from a year earlier and beating analysts’ expectation of $22 million in profits.
