TECHNOLOGY : Western Digital Stock Rebounds After Wall Street Analysts’ Recommendation

Western Digital Corp. in Irvine, a manufacturer of computer components, has seen its stock price bounce back in the past week after some Wall Street analysts began recommending its stock.

After hovering at about $4.50 a share for several months, the stock climbed to $5.125 a share on Sept. 29. The stock again closed at $5.125 a share on Monday, up 12 1/2 cents.

Western Digital’s recovery seems more credible since it reported its first profit in six quarters for the fourth quarter ended June 30, analysts said.

McMahon Securities Co. in Greenwich, Conn., issued a buy recommendation recently and praised the recent addition of Charles Haggerty, a disk-drive industry veteran from IBM, as president and chief executive of Western Digital.

The report also said Western Digital has benefited from a moderation of the industry’s vicious price wars of the past two years. Dataquest Inc., a market research firm in San Jose, recently predicted that the disk-drive industry would grow 17% to $29 billion in sales in 1992.

For its first quarter ending Sept. 30, analysts estimate Western Digital will report earnings later this month of four cents to 12 cents a share. But the McMahon report, produced by securities analyst Leonard Sanders, also noted a few red flags on the horizon.

The report said that the company’s cash flow is not sufficient to pay off $153 million in bank debt coming due next July, but it added that a successful renegotiation of the debt payments is expected.