Overview
TD Cowen on Friday increased its price objective for Western Digital Corp. (NASDAQ: WDC) to $325.00, up from $200.00, and reaffirmed a Buy rating on the stock. The move comes against a backdrop in which Western Digital shares have returned an exceptional 462% over the past year, according to InvestingPro data cited in analyst reporting.
Drivers cited by TD Cowen
The research house pointed to extended visibility from long-term agreements that run through calendar year 2028 and to anticipated gross margin expansion as the primary underpinnings for the much higher target. TD Cowen's note highlights expectations that margin improvement will materially boost the company’s earnings power over the next several years.
Supporting data referenced alongside the firm’s view show Western Digital posted 75% revenue growth over the last twelve months, and a current price-to-earnings multiple of 38.8, a level that the data provider characterizes as trading above Fair Value.
Margin forecasts and comparisons
TD Cowen projects Western Digital could approach roughly 60% gross margins by the end of calendar year 2027. The bank also observed that Western Digital's December quarter gross margins exceeded those of competitor Seagate Technology by four percentage points.
The new $325 target equates to 18 times TD Cowen’s calendar year 2027 earnings-per-share estimate of $18. That EPS estimate is higher than the pre-call Street consensus figure of $13 cited by the firm.
TD Cowen expects the margin gap between Western Digital and Seagate to narrow to a two percentage-point difference by December 2026 as Seagate accelerates deployment of its HAMR technology, but the firm still anticipates Western Digital will retain the stronger gross margin profile overall.
Recent company results and corporate actions
Western Digital reported solid Q2 FY2026 financials, delivering earnings per share of $2.13 versus a consensus forecast of $1.91, and revenue of $3.1 billion, which exceeded expectations by 6.16%. In parallel, Western Digital and KIOXIA extended their joint venture agreement at KIOXIA’s Yokkaichi plant through 2034, and SanDisk agreed to payment commitments totaling $1,165 million over several years tied to that arrangement.
Market and analyst reactions
Analysts have generally responded favorably to the company’s results and the strategic deal extension. Morgan Stanley lifted its price target to $306, pointing to sustainable pricing benefits that could underpin margin and earnings improvement. Goldman Sachs also raised its target to $220 but maintained a Neutral rating, noting that the quarterly report exceeded market expectations and that Seagate’s own strong performance has influenced investor sentiment.
Context and implications
The consensus of recent analyst commentary and the TD Cowen upgrade emphasizes two themes: extended contractual visibility through LTAs and potential for sustained gross margin expansion. Those elements together form the basis for the steeper valuation multiple implicit in TD Cowen’s $325 target.
Note on coverage - This report consolidates analyst statements and reported company results without adding additional forecasts or assumptions beyond those cited by the research teams and company disclosures.