Analysts Boost Western Digital Price Targets Amid Stronger Outlook and Positive Valuation Shifts

Western Digital's fair value estimate has been raised significantly from approximately $104 to $126 per share. Analysts cite strengthening demand dynamics, improving profitability projections, and a durable shift in industry economics as the reasons behind the upward revision.

Analyst Commentary

Recent analyst updates have reflected significant optimism regarding Western Digital’s business trajectory, while also highlighting a few ongoing areas of caution that could impact execution and long-term valuation.

• Bullish analysts have sharply increased their price targets, with several now expecting the stock to reach or exceed $150 per share. This is underpinned by what they view as durable, structurally improved industry economics.
• Improving supply-demand dynamics in both hard disk drive and NAND memory segments are expected to support higher average selling prices and lead to better-than-anticipated profitability.
• Ongoing demand from cloud infrastructure, the rise of artificial intelligence, and increasing requirements for high-capacity storage have created long-term tailwinds. This has led analysts to revise shipment forecasts and margin expectations upward.
• Western Digital's advanced technology roadmap, including leadership in hybrid SMR capacities and progress on HAMR qualifications, positions the company favorably against competitors as industry demand expands.

• Bearish analysts warn of potential volatility and friction in semiconductor and storage shares, driven by cyclical corrections or macroeconomic shifts that could impact forward visibility or valuation multiples.
• Extended lead times and tight supply, while presently positive for pricing, could eventually normalize. This may put pressure on margins and dampen the near-term enthusiasm reflected in some price target increases.
• There is acknowledgment of possible execution risks related to scaling new technologies and sustaining a premium mix as peers attempt to catch up in innovation and production flexibility.
• Some remain cautious about dilution effects from recent convertible notes and highlight the need for Western Digital to maintain consistent margin expansion to justify a re-rating in its valuation multiples.

What's in the News

• Western Digital announced the opening of its expanded System Integration and Test (SIT) Lab. The new 25,600 square foot facility is designed to accelerate customer success, enable faster time to value, and serve as a collaboration hub for AI and cloud storage qualification and validation. (Key Developments)
• The company completed a share buyback tranche by repurchasing 2,800,000 shares (0.8%) for $151.12 million from May 9 to June 27, 2025, fulfilling its recent buyback authorization. (Key Developments)
• Western Digital issued financial guidance for the first quarter of fiscal 2026, projecting revenues of $2.7 billion. (Key Developments)

Valuation Changes

• The Fair Value Estimate has increased substantially from $103.59 to $125.95 per share, reflecting improved fundamentals and a more favorable market outlook.
• The Discount Rate has risen slightly from 8.29% to 8.30%, indicating a minimal adjustment in risk perception.
• Revenue Growth expectations have strengthened from 9.31% to 11.59%, signaling a more optimistic outlook for top-line expansion.
• The Net Profit Margin is projected to improve from 17.30% to 20.46%, suggesting greater anticipated profitability.
• The Future P/E Ratio has declined modestly from 21.40x to 20.69x, pointing to potentially more favorable earnings relative to price.