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Pro Analysis

Shares of disk-drive maker Western Digital to rally 27 percent in 2017, analyst says

The hard drive assembly line at Western Digital.
Shepard Sherbell | Corbis | Getty Images
The hard drive assembly line at Western Digital.

BMO Capital Markets upgraded shares of Western Digital to outperform from market perform, citing the potential for strong revenue growth in 2017, attractive valuations and margin improvements.

"We expect to see the return of revenue growth in FY17 [fiscal year], fueled by continued demand for flash in a supply-constrained environment, the catching up on 3D NAND, and favorable customer relationships," equity analyst Tim Long wrote in a note to clients. The analyst's 12-month forecast implies a 27 percent gain from Wednesday's close.

Long believes Western Digital's focus on 3D Nand technology, a type of flash memory that allows for higher capacity and performance, should help the firm boost sales among its customer base.