Lake Forest-based disk drive maker Western Digital Corp., which saw its stock soar late last month after upping guidance, felt gravity’s pull on Tuesday.
Western Digital’s shares were down 2.4% at close of trading Tuesday after they were downgraded by J.P. Morgan & Co. The investment bank cut its rating because of what it called Western Digital’s high valuation.
J.P. Morgan shifted its rating on Western Digital to “underweight” from “neutral,” saying the stock’s recent runup has gotten ahead of the company’s growth prospects.
“In our view, now is an opportune time for investors to trim positions ahead of the often challenging summer months,” J.P. Morgan wrote.
In late March, Western Digital told investors that it would beat sales and profit forecasts for the March quarter on higher-than-expected prices for its desktop drives. Results are due April 21.
Western Digital said now it expects sales of $900 million to $915 million in the period, up from an earlier estimate of $885 million to $915 million. Net income is seen coming in at $60.5 million to $64.6 million, nearly double an earlier estimate.
“Overall industry demand for hard drives in the traditional computing markets during the March quarter has been seasonal as expected but consumer demand trends have been better than anticipated,” said Matt Massengill, Western Digital’s chief executive.
