Western Digital (NASDAQ:WDC) cannot seem to find buyers for its stock on the market. When the company reports quarterly results on October 25, sentiment may shift for the better, provided the storage supplier not only beats expectations but raises its outlook.
WDC stock topped ~$107 in March when the Nasdaq index bottomed. But as the technology index rose, WDC stock fell steadily. Even at an eight times P/E and 4.8 times forward P/E, markets are pricing sharply lower demand. The stock’s dividend yield of 3.5% is not giving any support, either.
Analysts at Cowen have low expectations, citing a CPU bottleneck will hold back sales of HDDs and SSDs in the coming quarters. More simply on explaining the underperformance in WDC stock is the drop in DRAM and NAND suppliers. Micron (NASDAQ:MU) fell even after buying out its JV partner, Intel (NASDAQ:INTC). Lam Research (NASDAQ:LRCX) and Taiwan Semi (NYSE:TSM) both reported a good quarter but that did little to move its share price.
With the negative momentum in storage continuing, Western Digital may not move much after the earnings report. Since much of the volatility is priced in the stock, investors should decide if the long-term growth in NAND storage and HDDs will continue. At these levels, the downside risks could already be priced in the shares.
