Western Digital (WDC) looks "well-positioned" to capitalize on data center buildout despite lacking technology against Seagate Technology (STX), Morgan Stanley said in a Friday note.

The company's data center expansion plans are "stronger" than ever and compute demand is rising, thus resulting in exponential growth for data creation, the note added.

Western Digital looks poised to speed up capital returns, either through a higher stock repurchase program or through a "more significant" dividend hike, the note said.

Morgan Stanley also said that although Western Digital is at least a year behind its peer Seagate Technology in HAMR technology, it will still capitalize on this "broad trend", which the market is underappreciating.

Morgan Stanley raised Western Digital's price target to $70 from $54 and maintained its overweight rating on the stock.

Price: 49.97, Change: +0.13, Percent Change: +0.26