Western Digital: Merrill Upgrades to Buy, Raises Estimates

Western Digital (WDC) shares are on the rise this morning after Merrill Lynch’s Steven Fox raised his rating on the stock to Buy from Neutral. He increased his price target on the disk-drive maker to $42 from $39. He also raised his EPS estimate for the June 2009 fiscal year to $4.40 from $4.10. “Wholesale improvement in WDC’s internal efforts and a two-year metamorphosis gives us confidence earnings growth can continue in fiscal 2009 despite a potentially more challenging end market environment,” he wrote in a research note.

Fox notes that a recent 18 percent price in WDC’s share price partly reflects concerns over the risk of weaker PC demand. But he points out that the company has diversified into new areas, including mobile devices and back-up storage.

WDC this morning is up $1.09, or 3.2 percent, to $34.88.

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