Western Digital (NASDAQ:WDC) Stock Price Down 13% Following Analyst Downgrade

Key Points

• Western Digital shares fell 13% after Summit Insights downgraded the stock from Buy to Hold, with trading volume 79% above average.
• The company exceeded quarterly expectations, reporting $3.56 adjusted EPS and $3.75 billion in revenue, while issuing above-consensus next-quarter guidance supported by strong cloud and AI storage demand.
• Investor concerns centered on projected gross margins of 55%–56% and elevated expectations after the stock’s roughly threefold gain over the past year, prompting profit-taking despite the earnings beat.

Western Digital Corporation (NASDAQ:WDC - Get Free Report)'s share price dropped 13% during trading on Thursday after Summit Insights downgraded the stock from a buy rating to a hold rating. The company traded as low as $407.48 and last traded at $451.52. 16,092,301 shares traded hands during trading, an increase of 79% from the average session volume of 8,965,441 shares. The stock had previously closed at $519.17.

Other equities analysts also recently issued reports about the company. Cantor Fitzgerald boosted their price objective on Western Digital from $660.00 to $900.00 and gave the stock an "overweight" rating in a research report on Monday, June 29th. Citigroup lifted their target price on Western Digital from $685.00 to $800.00 and gave the stock a "buy" rating in a research report on Monday, July 13th. Robert W. Baird upped their price target on shares of Western Digital from $310.00 to $450.00 and gave the company an "outperform" rating in a research report on Monday, May 4th. Mizuho increased their price objective on Western Digital from $550.00 to $685.00 and gave the stock an "outperform" rating in a research report on Monday, June 8th. Finally, Bank of America lifted their target price on shares of Western Digital from $610.00 to $732.00 and gave the company a "buy" rating in a report on Wednesday, July 1st. Two research analysts have rated the stock with a Strong Buy rating, eighteen have given a Buy rating and five have given a Hold rating to the company. According to MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average price target of $536.96.

Insider Buying and Selling

In other Western Digital news, Director Bruce E. Kiddoo sold 750 shares of the company's stock in a transaction dated Thursday, May 28th. The shares were sold at an average price of $528.52, for a total value of $396,390.00. Following the transaction, the director directly owned 3,903 shares in the company, valued at approximately $2,062,813.56. This represents a 16.12% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. Also, insider Cynthia L. Tregillis sold 808 shares of the company's stock in a transaction that occurred on Tuesday, July 21st. The shares were sold at an average price of $529.63, for a total transaction of $427,941.04. Following the transaction, the insider directly owned 114,539 shares in the company, valued at $60,663,290.57. The trade was a 0.70% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last quarter, insiders sold 5,093 shares of company stock worth $2,751,337. 0.18% of the stock is owned by corporate insiders.

More Western Digital News

Here are the key news stories impacting Western Digital this week:

• Positive Sentiment: Western Digital reported adjusted fourth-quarter earnings of $3.56 per share on $3.75 billion in revenue, exceeding consensus estimates of $3.31 EPS and $3.70 billion in revenue. Revenue increased 43.8% year over year, supported by cloud data-center and AI-related storage demand. Western Digital Q4 Earnings Beat as Revenue Jumps 44% on Cloud Demand
• Positive Sentiment: Management issued fiscal first-quarter 2027 revenue guidance of $4.0 billion to $4.2 billion and adjusted EPS guidance of $3.85 to $4.15, both above Wall Street expectations. Executives also said AI customers are negotiating storage capacity commitments extending through 2031, providing substantial long-term demand visibility. Western Digital Says AI Customers Are Already Negotiating Storage Deals Through 2031
• Neutral Sentiment: Analyst views were mixed. Robert W. Baird raised its price target to $630 and maintained a Buy rating, while Rosenblatt lowered its target to $800 but retained Buy; Summit Insights downgraded the stock from Buy to Hold. Western Digital also declared a $0.15-per-share quarterly dividend, although the approximately 0.1% yield is unlikely to materially affect the stock.
• Negative Sentiment: The main pressure point was fiscal first-quarter non-GAAP gross-margin guidance of 55% to 56%—a midpoint of 55.5%—which fell short of the higher profitability expectations set by Seagate’s recent results. Analysts viewed this as evidence that margin expansion may be stabilizing after a major rally. Western Digital Slumps Despite Q2 Beat as Analysts Highlight Peer Seagate’s Results
• Negative Sentiment: Investor expectations were unusually high after WDC’s shares had risen roughly threefold over the past year and AI-storage enthusiasm had driven the valuation higher. As a result, even an earnings beat and above-consensus revenue outlook were insufficient, prompting profit-taking and a broader selloff in storage and memory stocks.

Institutional Investors Weigh In On Western Digital

Institutional investors have recently bought and sold shares of the business. Norges Bank purchased a new position in shares of Western Digital in the fourth quarter valued at $788,729,000. Soroban Capital Partners LP lifted its position in shares of Western Digital by 1,926.3% during the second quarter. Soroban Capital Partners LP now owns 3,061,134 shares of the data storage provider's stock worth $195,882,000 after purchasing an additional 2,910,062 shares during the last quarter. Polar Capital Holdings Plc bought a new stake in shares of Western Digital in the 3rd quarter valued at approximately $221,800,000. Value Aligned Research Advisors LLC bought a new position in shares of Western Digital in the 1st quarter worth about $350,403,000. Finally, National Pension Service lifted its holdings in Western Digital by 267.6% in the fourth quarter. National Pension Service now owns 1,691,659 shares of the data storage provider's stock worth $291,422,000 after acquiring an additional 1,231,477 shares during the last quarter. 92.51% of the stock is currently owned by hedge funds and other institutional investors.

Western Digital Trading Down 13.0%

The firm has a market cap of $155.63 billion, a price-to-earnings ratio of 26.96 and a beta of 2.14. The stock has a 50-day moving average of $569.14 and a 200-day moving average of $415.61.

Western Digital (NASDAQ:WDC - Get Free Report) last issued its quarterly earnings results on Tuesday, August 4th. The data storage provider reported $3.56 earnings per share for the quarter, beating analysts' consensus estimates of $3.31 by $0.25. Western Digital had a return on equity of 42.95% and a net margin of 55.29%.The business had revenue of $3.75 billion for the quarter, compared to the consensus estimate of $3.70 billion. During the same quarter in the previous year, the company posted $1.66 earnings per share. Western Digital's revenue for the quarter was up 43.8% compared to the same quarter last year. As a group, research analysts expect that Western Digital Corporation will post 9.61 earnings per share for the current fiscal year.

Western Digital Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, September 17th. Investors of record on Tuesday, September 8th will be given a dividend of $0.15 per share. The ex-dividend date of this dividend is Tuesday, September 8th. This represents a $0.60 dividend on an annualized basis and a yield of 0.1%. Western Digital's dividend payout ratio (DPR) is presently 3.58%.

Western Digital Company Profile

Western Digital Corporation is a global data storage company that designs, manufactures and sells a broad range of storage devices and systems for personal, enterprise and cloud applications. Headquartered in San Jose, California, the company develops hard disk drives (HDDs), solid-state drives (SSDs), NAND flash components and finished storage products used in PCs, external storage, servers, network-attached storage (NAS) and embedded systems.

Its product portfolio spans consumer and commercial markets, including internal and external HDDs and SSDs, removable flash memory products and storage platforms for data center and enterprise environments.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source