Western Digital (NASDAQ:WDC) has received a downgrade from equities researchers at Wall Street Zen, moving from a “buy” rating to a “hold” rating, according to a report released on Saturday. This change follows a series of mixed assessments from several analysts regarding the company’s stock performance.
On January 16, 2024, Evercore reaffirmed its “outperform” rating while setting a price target of $230.00. Subsequently, on January 30, Barclays raised its price target from $240.00 to $325.00 and maintained an “overweight” rating. Morgan Stanley also increased its price objective for Western Digital from $260.00 to $306.00, with the same “overweight” rating. Meanwhile, New Street Research established a price target of $250.00 on February 3, and Wedbush reiterated its “outperform” rating with a target of $325.00 on February 9.
Overall, one research analyst has rated the stock as a Strong Buy, while twenty have given it a Buy rating and three have issued Hold ratings. According to data from MarketBeat, Western Digital currently has an average rating of “Moderate Buy” and an average target price of $265.58.
Quarterly Earnings Exceed Expectations
Western Digital reported its quarterly earnings on January 29, 2024, revealing an earnings per share (EPS) of $2.13, surpassing analysts’ consensus estimates of $1.93 by $0.20. The company’s revenue for the quarter reached $3.02 billion, exceeding projections of $2.93 billion. The net margin stood at 35.52%, with a return on equity of 41.53%. Year-over-year, quarterly revenue increased by 25.2%, up from $1.77 EPS during the same period last year. Analysts forecast that Western Digital will achieve an EPS of $4.89 for the current fiscal year.
Insider Transactions Raise Questions
In additional news, CEO Irving Tan sold 20,000 shares of the company’s stock on February 2, 2024, at an average price of $255.44, amounting to approximately $5.1 million. Following this transaction, Tan retains 623,586 shares, valued at around $159.3 million, reflecting a 3.11% decrease in his position.
Also on November 25, 2023, Director Roxanne Oulman sold 1,800 shares at an average price of $154.42, totaling $277,956. She now holds 3,863 shares, worth approximately $596,524.46, marking a 31.79% reduction in her ownership. In total, insiders have sold 70,522 shares worth around $17.66 million over the past ninety days, with corporate insiders owning 0.18% of the company’s stock.
Institutional Investor Activity Surges
Several hedge funds and institutional investors have recently adjusted their positions in Western Digital. Notably, WCM Investment Management LLC acquired a new position valued at approximately $791.3 million during the third quarter. Similarly, Norges Bank purchased a new stake worth $788.7 million in the fourth quarter.
Fred Alger Management LLC significantly increased its position by 4,923.9% during the third quarter, now holding 3,407,042 shares valued at $409.05 million after acquiring an additional 3,339,225 shares. Soroban Capital Partners LP lifted its stake by 1,926.3% in the second quarter, owning 3,061,134 shares valued at $195.88 million after buying an additional 2,910,062 shares.
Overall, institutional investors now hold 92.51% of Western Digital’s stock, highlighting significant interest from larger financial entities.
Founded in San Jose, California, Western Digital Corporation specializes in data storage solutions, manufacturing a range of products from hard disk drives to solid-state drives. The company’s offerings cater to personal, enterprise, and cloud applications, serving both consumer and commercial markets.
