Shares of Lake Forest-based Western Digital Corp., a maker of disk drives, slumped Monday after an analyst lowered his price target on the company’s stock.
The company’s shares closed down 5% on a market value of about $3 billion.
Robert W. Baird & Co. analyst Jayson Noland lowered his target price to $15 from $24, according to an Associated Press report.
He kept a “neutral” rating on the stock, which was trading at about $14 on Monday.
Unlike other analysts, who were encouraged by Western Digital’s quarterly results last week, Noland focused in on the company’s weaker-than-expected outlook, the report showed.
For the current quarter, Western Digital forecast sales of $2.025 billion to $2.15 billion, about even with the recently ended quarter.
Western Digital said it sees profits coming in at $177 million to $199 million, ahead of Wall Street expectations.
Noland raised concerns about slower growth due to the overall economic climate coupled with the lower-than-normal sales Western Digital typically sees during the first part of the year.
“Though we have confidence management will execute well through this difficult environment, 2009 uncertainty keeps us on the sidelines for the (hard disk drive) industry,” Noland wrote in a note to clients.
Western Digital’s been on a bit of a wild ride in the past few trading days.
The company’s shares slumped last week after key rival Seagate Technology gave a weak outlook for the current quarter.
Investors lost confidence in Western Digital’s prospects ahead of its earnings report after Seagate said it was set to restructure and aggressively cut costs to stay afloat.
The company bounced back and saw shares jump on an analyst upgrade at the end of last week, a day after it reported quarterly results that beat Wall Street expectations.
Analyst Noland, despite lowering his price target, pointed out that the company still has a lot of good things going for it.
He said the company’s execution of its business plan “has been impressive,” the report showed.
He also said Western Digital is “positioned well in faster-growing segments,” such as mobile devices, which net higher profits.
“We expect (Western Digital’s) low-cost model and technology lead will allow the company to continue gaining share in the large and fast-growing mobile market,” he wrote.
