As previously reported, Craig-Hallum analyst Christian Schwab downgraded Marvell to Hold from Buy saying the company's Storage business is being significantly impacted by Western Digital (WDC) and Seagate's (STX) unit weakness and inventory management. Although the HDD industry is expecting to rebound in the back half of the calendar year, the improvement is expected to be driven by hyperscale datacenter spending, he contends, adding that these drives have higher ASPs and margins benefiting the HDD manufacturers, but will not drive a material unit recovery. Schwab believes NAND price elasticity will offer an opportunity in the 2H of 2019 for Marvell's SSD controller business to improve. However, NAND price elasticity is not instant and will be driven by new innovations and new platforms coming to market, the analyst contends. He also lowered his price target on Marvell's shares to $19 from $22.

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Baird raised the firm's price target on Western Digital to $100 from $65 and keeps an Outperform rating on the shares. The firm said in addition to a return to sustainability in HDD fundamentals notably from a gross margin standpoint, emerging from over a decade of overcapacity in the HDD industry, Western Digital is poised to benefit from incremental SSD demand around training and inference, in addition to AI driving HDD capacity needs medium-term.

Benchmark upgraded Western Digital to Buy from Hold with an $85 price target.

Sees Q4 revenue $3.6B-$3.8B, consensus $3.69B.

Reports Q3 GAAP EPS 34c. Reports Q3 revenue $3.46B, consensus $3.36B. "As evidenced by our excellent third quarter results, Western Digital continues improving through-cycle profitability and dampening business cycles by leveraging our strategy of developing a diversified portfolio of industry-leading products across a broad range of end markets," said David Goeckeler, Western Digital CEO. "We are in the early innings of unlocking the full potential of this company, and as industry supply and demand dynamics continue to improve, we will remain disciplined around our capital spending and focused on driving innovation and efficiency across our businesses. We are confident in our strategy and the actions we have taken to-date, which successfully position us to capitalize on the promising growth prospects that lie ahead."

Pre-earnings options volume in Western Digital is 1.4x normal with calls leading puts 7:5. Implied volatility suggests the market is anticipating a move near 6.2%, or $4.32, after results are released. Median move over the past eight quarters is 2.1%.

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