Longbow Upgrades Western Digital with NAND recovery in 'Line Of Sight'

Longbow Research analyst Nikolay Todorov upgraded Western Digital (WDC) to Buy from Neutral with a $65 price target.

The stock closed Friday up $1.00 to $51.83.

NAND fundamentals are bottoming and "there is a line of sight to cyclical recovery," Todorov tells investors in a research note. The analyst believes NAND production is likely to be further rationalized with industry profitability under pressure and points out that pricing has recently shown signs of stabilization. Further, a hard drive revenue and gross margin recovery in the second half of 2019 does not appear to be fully contemplated by the Street, says Todorov.

He sees an "asymmetric risk/reward" for Western Digital shares at current levels.