Investors Purchase Large Volume of Call Options on Western Digital (NASDAQ:WDC)

Key Points

• Western Digital experienced a significant surge in call options trading, with 76,361 call options purchased, marking a 473% increase over its typical daily volume.
• Research analysts are optimistic about the company, with 18 analysts rating it as a buy and an average price target set at $74.47.
• The company announced a $0.10 quarterly dividend with a yield of 0.51% and initiated a $2 billion share repurchase program indicating confidence in its stock valuation.

Western Digital Corporation (NASDAQ:WDC - Get Free Report) was the target of unusually large options trading activity on Thursday. Stock traders acquired 76,361 call options on the stock. Thisisanincreaseofapproximately473% compared to the typical daily volume of 13,317 call options.

Wall Street Analyst Weigh In

A number of analysts have recently issued reports on the stock. Benchmark lifted their price objective on shares of Western Digital from $58.00 to $85.00 and gave the company a "buy" rating in a report on Thursday. Rosenblatt Securities lifted their price objective on shares of Western Digital from $53.00 to $90.00 and gave the company a "buy" rating in a report on Thursday. Bank of America lifted their price objective on shares of Western Digital from $62.00 to $71.00 and gave the company a "buy" rating in a report on Monday, June 9th. Wells Fargo & Company reiterated an "overweight" rating and issued a $95.00 price objective (up from $80.00) on shares of Western Digital in a report on Thursday. Finally, Summit Insights upgraded shares of Western Digital from a "hold" rating to a "buy" rating in a report on Wednesday, April 30th. Four research analysts have rated the stock with a hold rating and eighteen have issued a buy rating to the company's stock. According to MarketBeat.com, Western Digital currently has an average rating of "Moderate Buy" and a consensus price target of $78.74.

Western Digital Stock Performance

WDC stock traded down $0.05 during midday trading on Monday, reaching $76.50. 890,100 shares of the company were exchanged, compared to its average volume of 8,034,157. The business has a 50-day moving average price of $62.22 and a two-hundred day moving average price of $53.76. The firm has a market capitalization of $26.69 billion, a price-to-earnings ratio of 14.89, a price-to-earnings-growth ratio of 0.98 and a beta of 1.58. Western Digital has a one year low of $28.83 and a one year high of $78.80. The company has a debt-to-equity ratio of 0.47, a current ratio of 1.08 and a quick ratio of 0.84.

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

Western Digital Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, September 18th. Investors of record on Thursday, September 4th will be given a dividend of $0.10 per share. The ex-dividend date of this dividend is Thursday, September 4th. This represents a $0.40 annualized dividend and a yield of 0.5%. Western Digital's dividend payout ratio is currently 7.77%.

Western Digital declared that its Board of Directors has approved a stock buyback program on Tuesday, May 13th that allows the company to buyback $2.00 billion in shares. This buyback authorization allows the data storage provider to reacquire up to 11.7% of its shares through open market purchases. Shares buyback programs are typically an indication that the company's management believes its shares are undervalued.

Insider Activity at Western Digital

In related news, CEO Irving Tan sold 11,379 shares of Western Digital stock in a transaction that occurred on Tuesday, May 13th. The shares were sold at an average price of $48.19, for a total transaction of $548,354.01. Following the transaction, the chief executive officer owned 605,481 shares of the company's stock, valued at $29,178,129.39. This trade represents a 1.84% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link. Also, SVP Gene M. Zamiska sold 1,729 shares of Western Digital stock in a transaction that occurred on 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 transaction, 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. Insiders have sold a total of 13,353 shares of company stock worth $657,454 in the last three months. 0.30% of the stock is owned by insiders.

Institutional Inflows and Outflows

Institutional investors have recently bought and sold shares of the business. Private Wealth Management Group LLC increased its stake in shares of 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 buying an additional 202 shares during the period. CNB Bank acquired a new position in shares of Western Digital in the second quarter valued at approximately $37,000. Elequin Capital LP acquired a new position in shares of Western Digital in the fourth quarter valued at approximately $40,000. FNY Investment Advisers LLC increased its stake in shares of Western Digital by 178.3% in the second quarter. FNY Investment Advisers LLC now owns 668 shares of the data storage provider's stock valued at $42,000 after buying an additional 428 shares during the period. Finally, Zions Bancorporation National Association UT acquired a new position in shares of Western Digital in the first quarter valued at approximately $29,000. Institutional investors and hedge funds own 92.51% of the company's stock.

Western Digital Company Profile

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.