Jefferies analyst James Kisner believes Western Digital's (WDC) potential acquisition of SanDisk (SNDK), despite being very accretive, would introduce "many long-term strategic questions." Potential negatives from the deal include technology uncertainty in flash, a reduction in flexibility since Western Digital would no longer have a big net cash position, and risks to SanDisk's royalty stream, Kisner tells investors in a research note. He remains "very bullish" on Western Digital and keeps a Buy rating on the name but lowered his price target for shares to $111 from $116.

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%.