Western Digital (NASDAQ:WDC) and Seagate Technology (NASDAQ:STX) shares rose fractionally in premarket buying and selling on Friday even as Wells Fargo lowered estimates on the storage corporations, citing “very weak nearline hard-disk drive demand.”

Analyst Aaron Rakers lowered income and earnings per share estimates for 2023 and 2024 on Western Digital (WDC) to $12.7B in income and earnings per shares of 35 cents and $15B and $3.47 per share, down from $14.1B and $2.37 per share and $16B and $4.84 per share, respectively.

He additionally lower his estimates on Seagate (STX) to $8.36B and $2.11 per share and $9.41B and $4.75 per share, down from $8.92B and $3.65 per share and $9.95B and $5.91 per share, respectively.

“This is being pushed by a pointy cloud and enterprise OEM stock digestion that we imagine might persist via [the first-half of 2023],” Rakers wrote in a notice to shoppers.

He added that discovering a backside in demand within the first-half of 2023 is contingent upon whether or not HDD capability cargo estimates change into cheap.

Rakers additionally famous that debt covenant leverage ratio will increase executed by each corporations final 12 months might end in draw back to EBITDA and current “elevated danger of surpassing prior leverage ratio covenants.”

Earlier this month, funding agency Benchmark upgraded Western Digital (WDC) on reviews that the corporate has restarted merger talks with Japan’s Kioxia.