US$62.98 - That's What Analysts Think Western Digital Corporation (NASDAQ:WDC) Is Worth After These Results

Investors in Western Digital Corporation (NASDAQ:WDC) had a good week, as its shares rose 6.3% to close at US$58.23 following the release of its second-quarter results. It looks like the results were pretty good overall. While revenues of US$3.0b were in line with analyst predictions, statutory losses were much smaller than expected, with Western Digital losing US$0.87 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Western Digital

Taking into account the latest results, the current consensus from Western Digital's 21 analysts is for revenues of US$12.7b in 2024. This would reflect a decent 12% increase on its revenue over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 59% to US$2.90. Before this latest report, the consensus had been expecting revenues of US$12.3b and US$4.31 per share in losses. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very favorable reduction to loss per share in particular.

It will come as no surprise to learn thatthe analysts have increased their price target for Western Digital 19% to US$62.98on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Western Digital at US$82.00 per share, while the most bearish prices it at US$33.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that Western Digital is forecast to grow faster in the future than it has in the past, with revenues expected to display 27% annualised growth until the end of 2024. If achieved, this would be a much better result than the 4.9% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 5.0% per year. So it looks like Western Digital is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Western Digital. Long-term earnings power is much more important than next year's profits. We have forecasts for Western Digital going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Western Digital has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.