Western Digital Corp(NASDAQ: WDC) has reported the adjusted revenue of $4.89 billion in the second quarter and adjusted earnings per share of $2.30 beating the analysts’ expectation for revenue of $4.76 billion and earnings per share of $2.12. This performance was driven by strength in enterprise and notebooks amid stabilizing PC demand and a shift by businesses to cloud storage. Moreover, Western Digital got to benefit from its shift to high-performance and cost-effective NAND flash drives, which is fast replacing the traditional magnetic storage method. The company had bought SanDisk in May to bolster its NAND flash technology. The demand for the company’s cloud-based data storage products has also increased as businesses increasingly move to the cloud.

Additionally, the adjusted gross margin expanded 810 basis points year over year to 36.4%, better than the management’s guidance of 35%. The expansion was due to the lower product cost and pricing improvement.

Western Digital is on track to achieve the $800 million of annualized savings from the HGST integration by the end of CY 2017. The company has achieved $175 million of the cost of revenue synergies and $300 million of operating expense synergies each on an annual run rate basis at the end of the second quarter.

In terms of SanDisk integration, at the end of second quarter, Western Digital has realized synergies of approximately $135 million on an annual run-rate basis, which is in line with the company’s 18-month target of achieving $500 million of total run rate synergies on an annualized basis. The SanDisk acquisition will not only expand WDC’s offerings in the SSD segment but will also provide a competitive edge against peers such as Seagate Technology STX.

Meanwhile, in the third quarter, Western Digital expects the revenues to remain flat on a sequential basis. The adjusted gross margin is expected to be 38% backed by continued favorable pricing and product mix across the company’s businesses. The total operating expenses are expected to be approximate $800 million. The interest expense is expected to be approximate $205 million. In addition, WDC expects the adjusted earnings to be in the range of $2.00–$2.10 per share for the third quarter.

Western Digital considers the shift toward non-PC applications, secular growth of digital data and growing exposure to the small and medium business space are the long-term positives for the company.

WDC stock has risen 75.94% in the last one year (source: Google Finance) and has an average price target of $88.60, which is a further upside of 10.75%.