Morgan Stanley Issues Pessimistic Forecast for Western Digital (NASDAQ:WDC) Stock Price

Key Points

• Morgan Stanley has reduced Western Digital's price target from $85.00 to $83.00 while maintaining an "overweight" rating, indicating an expected upside of 18.21% from the current price.
• The company recently reported a quarterly earnings of $1.36 per share, exceeding estimates, but experienced a 33.6% drop in revenue year-over-year.
• Western Digital initiated a $2.00 billion stock buyback program, which allows the company to repurchase up to 11.7% of its shares, reflecting management's belief in the stock's undervaluation.

Western Digital (NASDAQ:WDC - Get Free Report) had its target price dropped by equities researchers at Morgan Stanley from $85.00 to $83.00 in a report released on Tuesday,Benzinga reports. The firm presently has an "overweight" rating on the data storage provider's stock. Morgan Stanley's price target suggests a potential upside of 8.43% from the stock's previous close.

WDC has been the subject of several other research reports. JPMorgan Chase & Co. raised shares of Western Digital from a "neutral" rating to an "overweight" rating and lifted their price objective for the company from $45.00 to $57.00 in a research note on Thursday, May 1st. Barclays set a $50.00 price objective on shares of Western Digital and gave the company an "overweight" rating in a research note on Thursday, May 1st. Citigroup lifted their price objective on shares of Western Digital from $62.00 to $78.00 and gave the company a "buy" rating in a research note on Friday, July 11th. Wedbush reissued an "outperform" rating and set a $60.00 target price on shares of Western Digital in a research report on Thursday, May 1st. Finally, TD Cowen cut their target price on shares of Western Digital from $80.00 to $58.00 and set a "buy" rating for the company in a research report on Thursday, May 1st. Four analysts have rated the stock with a hold rating and eighteen have given a buy rating to the stock. Based on data from MarketBeat.com, the company has a consensus rating of "Moderate Buy" and an average target price of $78.74.

Western Digital Stock Down 2.7%

Shares of Western Digital stock traded down $2.14 on Tuesday, hitting $76.55. 8,789,013 shares of the company traded hands, compared to its average volume of 7,140,905. The company has a 50-day moving average price of $62.22 and a 200 day moving average price of $53.90. The company has a quick ratio of 1.31, a current ratio of 1.08 and a debt-to-equity ratio of 0.47. Western Digital has a 12-month low of $28.83 and a 12-month high of $78.80. The company has a market cap of $26.71 billion, a PE ratio of 14.86 and a beta of 1.58.

Western Digital (NASDAQ:WDC - Get Free Report) last posted its quarterly earnings results on Wednesday, July 30th. The data storage provider reported $1.66 EPS for the quarter, beating the consensus estimate of $1.48 by $0.18. Western Digital had a net margin of 14.13% and a return on equity of 24.93%. The business had revenue of $2.61 billion for the quarter, compared to analysts' expectations of $2.45 billion. During the same period in the previous year, the company posted $1.44 EPS. Western Digital's revenue was up 30.0% on a year-over-year basis. Sell-side analysts predict that Western Digital will post 4.89 earnings per share for the current year.

Western Digital announced that its board has authorized a share repurchase program on Tuesday, May 13th that permits the company to buyback $2.00 billion in outstanding shares. This buyback authorization permits the data storage provider to repurchase up to 11.7% of its shares through open market purchases. Shares buyback programs are typically an indication that the company's leadership believes its shares are undervalued.

Insider Transactions at Western Digital

In related news, CEO Irving Tan sold 11,379 shares of Western Digital stock in a transaction dated Tuesday, May 13th. The stock was sold at an average price of $48.19, for a total transaction of $548,354.01. Following the sale, the chief executive officer directly owned 605,481 shares of the company's stock, valued at $29,178,129.39. This trade represents a 1.84% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. Also, SVP Gene M. Zamiska sold 1,729 shares of the company's stock in a transaction dated Thursday, June 5th. The shares were sold at an average price of $54.88, for a total transaction of $94,887.52. Following the completion of the sale, the senior vice president directly owned 40,089 shares in the company, valued at approximately $2,200,084.32. The trade was a 4.13% decrease in their position. The disclosure for this sale can be found here. Over the last three months, insiders have sold 13,353 shares of company stock worth $657,454. 0.30% of the stock is owned by company insiders.

Institutional Trading of Western Digital

Institutional investors and hedge funds have recently added to or reduced their stakes in the business. Private Wealth Management Group LLC increased its stake in Western Digital by 102.5% in the second quarter. Private Wealth Management Group LLC now owns 399 shares of the data storage provider's stock valued at $26,000 after acquiring an additional 202 shares during the period. Zions Bancorporation National Association UT acquired a new stake in shares of Western Digital during the first quarter worth approximately $29,000. CNB Bank acquired a new stake in shares of Western Digital during the second quarter worth approximately $37,000. Allworth Financial LP increased its holdings in shares of Western Digital by 34.1% during the first quarter. Allworth Financial LP now owns 955 shares of the data storage provider's stock worth $38,000 after buying an additional 243 shares in the last quarter. Finally, Elequin Capital LP acquired a new stake in shares of Western Digital during the fourth quarter worth approximately $40,000. Institutional investors own 92.51% of the company's stock.

About Western Digital

Western Digital Corporation develops, manufactures, and sells data storage devices and solutions in the United States, China, Hong Kong, Europe, the Middle East, Africa, rest of Asia, and internationally. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for desktop and notebook personal computers (PCs), gaming consoles, and set top boxes; and flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, Internet of Things, industrial, and connected home applications.