PREVIEW: Western Digital slides heading into earnings as AI trade tumbles

Western Digital

Yesterday 19:05

** Shares of Western Digital WDC.O falling 7.4% to $350.59 on Thurs ahead of qtrly results, due after market close, amid broader selloff in tech as enthusiasm for the AI trade fades
** S&P 500 tech sector .SPLRCT dropping 3% on Thurs, a sharp reversal from Weds after results from the likes of SpaceX SPCX.O and Super Micro SMCI.O sparked an AI-fueled relief rally
** Data storage device maker WDC is expected to post fiscal Q1 rev up 47% yr/yr to $4.14 bln and adj EPS of $4.09, vs $1.78 a yr ago, per LSEG
** In Aug, WDC forecast qtrly rev slightly above estimates but its shares fell as the outlook failed to meet lofty expectations after a massive run-up in the stock
** Even with the decline, WDC stock has rallied ~104% YTD, significantly outperforming SPLRCT's 21% gain and Nasdaq's .IXIC 12% advance
** Stock recently traded at 15x fwd earnings, below its 5-year avg of 17 - LSEG
** 20 of 27 analysts rate the stock "strong buy" or "buy", 7 rate "hold"; median PT of $625 implies roughly 78% upside from current levels

(Lance Tupper is a Reuters market analyst. The views expressed are his own)
((lance.tupper@tr.com 1-646-279-6380))