Western Digital (NASDAQ:WDC) Shares Gap Down – Should You Sell?

Western Digital Corporation (NASDAQ:WDC) shares gapped down before the market opened on Friday. The stock had previously closed at $462.56, but opened at $423.20. Western Digital shares last traded at $415.43, with a volume of 4,984,819 shares.

Key Stories Impacting Western Digital

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

• Positive Sentiment: Western Digital continues to benefit from strong data-storage demand tied to artificial intelligence and data centers. Recent commentary highlighted the role of WD Red Pro HDDs in AI-powered NAS systems and described data-center bottlenecks as supporting a long-term investment case. Western Digital AI-powered NAS transcript
• Positive Sentiment: Analysts and quantitative screens continue to point to Western Digital’s accelerating earnings growth and long-term growth potential. The company’s latest reported quarter also exceeded consensus expectations for both earnings and revenue, providing fundamental support for the stock.
• Neutral Sentiment: Western Digital had recently outperformed, and some of the sector weakness may reflect profit-taking after a strong run. A separate report noted that even Micron’s record results and upbeat guidance failed to prevent selling across parts of the memory complex, suggesting investors are reassessing elevated valuations and expectations. Memory-sector market reaction
• Negative Sentiment: Toshiba’s planned HDD capacity expansion is the key negative catalyst. A larger supply base could undermine the tight supply conditions that have supported HDD pricing and earnings expectations, prompting investors to reduce exposure to Western Digital and Seagate. Toshiba HDD capacity expansion

Wall Street Analyst Weigh In

Several equities analysts have commented on the stock. Rosenblatt Securities decreased their target price on shares of Western Digital from $900.00 to $800.00 and set a “buy” rating on the stock in a report on Thursday, August 6th. TD Cowen increased their price target on shares of Western Digital from $500.00 to $540.00 and gave the stock a “buy” rating in a research report on Thursday, August 6th. UBS Group decreased their price objective on shares of Western Digital from $560.00 to $525.00 and set a “neutral” rating on the stock in a research note on Thursday, August 6th. Citigroup lowered their price objective on shares of Western Digital from $800.00 to $740.00 and set a “buy” rating for the company in a research report on Friday, August 7th. Finally, Weiss Ratings upgraded Western Digital from a “hold (c+)” rating to a “buy (b-)” rating in a research note on Monday. Two investment analysts have rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating and five have issued a Hold rating to the company’s stock. Based on data from MarketBeat.com, the stock has an average rating of “Moderate Buy” and a consensus price target of $534.56.

Western Digital Stock Performance

The stock’s fifty day simple moving average is $467.20 and its two-hundred day simple moving average is $470.83. The stock has a market capitalization of $137.71 billion, a P/E ratio of 16.50, a price-to-earnings-growth ratio of 1.93 and a beta of 2.11.

Western Digital (NASDAQ:WDC) last released its quarterly earnings results on Wednesday, August 5th. The data storage provider reported $3.56 earnings per share (EPS) for the quarter, beating the consensus estimate of $3.31 by $0.25. The firm had revenue of $3.75 billion during the quarter, compared to the consensus estimate of $3.70 billion. Western Digital had a net margin of 72.95% and a return on equity of 48.15%. The company’s revenue for the quarter was up 43.8% on a year-over-year basis. During the same quarter last year, the firm earned $1.66 earnings per share. Western Digital has set its Q1 2027 guidance at 3.850-4.150 EPS. As a group, analysts expect that Western Digital Corporation will post 19.65 earnings per share for the current fiscal year.

Western Digital Announces Dividend

The business also recently announced a quarterly dividend, which was paid on Thursday, September 17th. Investors of record on Tuesday, September 8th were given a dividend of $0.15 per share. This represents a $0.60 annualized dividend and a yield of 0.2%. The ex-dividend date of this dividend was Tuesday, September 8th. Western Digital’s dividend payout ratio (DPR) is currently 2.48%.

Insiders Place Their Bets

In other news, insider Cynthia L. Tregillis sold 1,007 shares of the firm’s stock in a transaction dated Thursday, August 27th. The stock was sold at an average price of $478.36, for a total transaction of $481,708.52. Following the completion of the transaction, the insider directly owned 112,155 shares in the company, valued at $53,650,465.80. This trade represents a 0.89% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Irving Tan sold 20,000 shares of Western Digital stock in a transaction that occurred on Tuesday, August 11th. The stock was sold at an average price of $444.97, for a total value of $8,899,400.00. Following the completion of the transaction, the chief executive officer directly owned 575,966 shares in the company, valued at approximately $256,287,591.02. This represents a 3.36% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last three months, insiders have sold 25,437 shares of company stock valued at $11,461,345. 0.18% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently modified their holdings of the company. QRG Capital Management Inc. boosted its stake in shares of Western Digital by 32.4% in the 2nd quarter. QRG Capital Management Inc. now owns 87,122 shares of the data storage provider’s stock valued at $55,647,000 after purchasing an additional 21,337 shares during the last quarter. Envestnet Portfolio Solutions Inc. increased its position in shares of Western Digital by 25.7% during the second quarter. Envestnet Portfolio Solutions Inc. now owns 10,487 shares of the data storage provider’s stock worth $6,698,000 after buying an additional 2,142 shares during the period. ABS Direct Equity Fund LLC raised its stake in Western Digital by 112.8% during the second quarter. ABS Direct Equity Fund LLC now owns 1,277 shares of the data storage provider’s stock worth $816,000 after buying an additional 677 shares during the last quarter. Sequoia Financial Advisors LLC raised its stake in Western Digital by 3.5% during the second quarter. Sequoia Financial Advisors LLC now owns 17,263 shares of the data storage provider’s stock worth $11,026,000 after buying an additional 579 shares during the last quarter. Finally, MCF Advisors LLC lifted its holdings in Western Digital by 480.4% in the second quarter. MCF Advisors LLC now owns 296 shares of the data storage provider’s stock valued at $189,000 after buying an additional 245 shares during the period. Institutional investors and hedge funds own 92.51% of the company’s stock.

About Western Digital

Western Digital Corporation (NASDAQ: WDC) develops, manufactures and supplies data-storage products and solutions. The company’s portfolio is centered on hard disk drives (HDDs) used in cloud and enterprise data centers, personal computers, network-attached storage systems and other applications that require high-capacity data storage.

Western Digital markets products under brands including Western Digital, WD and Ultrastar. Its offerings include enterprise and data-center HDDs, storage products for business and consumer systems, and related technologies designed to help organizations store, manage and access large volumes of data.

Founded in 1970, Western Digital has evolved from a maker of electronic components into a global data-storage company.