Western Digital shares move up after analysts move the rating up to strong buy

Seagate Technology and Western Digital, the two major digital storage hard disc drive providers are facing entirely differing situations in the stock market. Seagate, the temporary market leader for a better part of 2012 saw a downward motion in its stock on Thursday while WD was up on the graph.

The stock changed colour when Needham and Co. rephrased its ratings on both the companies earlier in the day. Due to a low demand for its product, Seagate received a rating of hold. Its stock fell 3 percent in the early trading to nearly $31.

Shares of Western Digital, the US-based hard drive manufacturer and Seagate’s direct competitor were up only a fraction after Needham recommended its strong buy. Needham maintained the stance that WD products are more in-demand than Seagate’s.

Both companies provide their HDDs to PC makers like Samsung, HP, Dell, Toshiba and Asus. WD, in addition, are also the major vendor for Apple products.

Needham, despite Western Digital’s strong footing in the market, cut its estimates on the company’s shares from 61 to 53. The WDC shares were trading at $42.15 on Thursday. According to the investment bank, the cut in estimation is due to the slow growth in the market and probable less demand for its merchandize in the coming days. The main reason for low demand, as put by several sources, is the slow global economy.

Western Digital also specializes in the manufacturing of more advanced solid-state drives. However, due to their expensive nature their use is limited to certain ultrabooks and tablets. Smartphones also use flash memory but the chip-hardware factor is not very profitable, as is the SSD business on the whole.

Both Seagate and Western Digital were hit hard by the monsoon floods in Thailand last year. WD has its main manufacturing plant in Thailand and was struck the most. Seagate incurred less operational losses and gained a head start in the beginning of 2012. However, WD has reclaimed the top spot in the market after recovering completely from natural catastrophe.

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Posted by Usman Khalid on Sep 8 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.