Western Digital's (WDC) fiscal Q4 results "re-confirm" the broader thesis that hard drive disks are entering a period of upbeat growth and margins, enabling positive estimate revisions for the company, Morgan Stanley said in a Thursday note.

Building on this, Morgan Stanley believed that Western Digital is likely to "outperform" over the next 12 months, and sat 16% and 28% above consensus for 2026 and 2027 estimates. Morgan Stanley analysts increased 2026 revenue and earnings per share estimates by 3% and 5% to $11 billion and $6.61, respectively.

Morgan Stanley said Western Digital's fiscal Q1 gross margin guidance was "conservative" and added that it "wouldn't be surprised" if Q1 results exceed the higher end of the gross margin guidance.

Additionally, Morgan Stanley said it estimates the company to buy back about 10% of their market capitalization over the next six quarters.

The firm remained overweight on the stock but raised its price target to $92 from $83.