MarketPulse: Western Digital Dives as Analysts Sound Alarm Bell on Earnings

Investing.com – Western Digital fell on Thursday, stifling gains in semiconductors after Wall Street turned bearish on the data-storage company on worries over upcoming earnings and guidance.

Western Digital (NASDAQ:WDC) fell 4.5% as analysts sounded the alarm on upcoming earnings, fearing the ongoing slump in memory prices will hurt performance, leading to weaker guidance.

"We’ve clearly misjudged the severity of the downturn in NAND," said Wells Fargo.

Wells Fargo cut its price target on Western Digital to $65 from $75, saying weak fundamental trends point to "ugly" third-quarter guidance.

The gloomy outlook, as well as expectations for second-quarter earnings to come in at low end of the consensus estimates, was echoed by Deutsche Bank (DE:DBKGn).

Western Digital is slated to release second-quarter results in on Jan. 24, after the closing bell.

Semiconductor foundry Taiwan Semiconductor Manufacturing (NYSE:TSM), meanwhile, exacerbated concerns about the malaise in semis as it warned first-quarter revenue would fall short of expectations. It blamed a weaker macroeconomic outlook, mobile product seasonality and a glut in inventories in the semiconductor supply chain. Its shares, however, inched 1% higher.

The company reported December-quarter sales of $9.4 billion, slightly above the Wall Street consensus of $9.37 billion. But it also gave a March-quarter revenue guidance range of $7.3 billion to $7.4 billion, below estimates of $8 billion.

Still, there's light at the end of tunnel for Taiwan Semi, even as 2019 is set to be a tough year for the company, according to JPMorgan

"We see two silver linings for Taiwan Semi," JPMorgan (NYSE:JPM) said, citing the company's commitment "to raise cash dividends despite potential for earnings decline" and a "strong pipeline for 7nm from second half of 2019 as well as good initial engagement for 5nm." Both of which should "cement Taiwan Semis technology leadership in the next few years."

The Philadelphia Semiconductor Index was flat in afternoon trading.

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