After Japanese newspaper Nikkan reported that a consortium which includes Western Digital (WDC) would buy Toshiba's (TOSBF) memory assets, RBC Capital analyst Amit Daryanani says that Western Digital will likely hold a minority stake in the assets, given anti-trust concerns. The analyst estimates that a 12%-13% stake would boost Western Digital's EPS by 25c-30c in 2018. Daryanani believes that the deal will be positive for the company as it will enable it to secure NAND bit capacity, prevent Foxconn/SK Hynix from getting the asset, and could boost its profits. He keeps a $115 price target and an Outperform rating on the stock.

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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%.