Lake Forest-based Western Digital Corp., the world’s top maker of disk drives, was downgraded by a Wall Street analyst on Wednesday on concerns about slowing demand for computers.
UBS Securities LLC analyst Arum Sharma lowered his estimates and price targets for both Western Digital and its biggest rival, Scotts Valley-based Seagate Technology LLC due to their “consumer PC and notebook exposure.”
He lowered his rating on Western Digital’s shares to “neutral” from a “buy” and lowered his price target on to $28.50 a share from a previous target of $34 a share.
Western Digital was trading at about $26 a share on Wednesday with a market value of $6 billion.
Sharma said that disk drive demand in the June quarter was “below expectations,” according to a research note that was quoted in a Dow Jones report.
“We had been expecting a rebound in demand for the September quarter from a back-to-school uptick combined with continued strength from a corporate refresh cycle,” Sharma said in the report.
Western Digital’s downgrade comes amid increasing concern about PC demand from other computer products makers.
PC maker Hewlett-Packard Co. warned in July it is seeing a slowdown in Europe as people there halted some of their spending.
Chip kingpin Intel Corp., a bellwether for the technology industry, earlier this month cut its outlook for the current quarter and gave a cautious statement about the rest of the year, citing “weaker-than-expected demand for consumer PCs in mature markets.”
Analyst Sharma added that corporate PC buying “looks solid,” but not enough to offset weaker demand for notebooks by consumers.
He now expects 2010 disk drive unit shipments to grow 17%, down from a previous estimate of 20% growth this year.
Western Digital’s investors seemed to shrug off the downgrade.
Its shares were roughly flat in afterhours trading on a recent market value of $6 billion.
Western Digital’s shares are off 22% in the past 3 months.
