Western Digital has had a remarkable week — the stock up 10% to $562.93, shorts cutting positions at the fastest pace in months, and Wall Street's biggest names racing to lift price targets. The tension worth watching is whether the rally has already priced in what the bulls are now chasing.
The short-covering story is striking. Short interest dropped 14.6% over the week to 7.8% of the free float, the sharpest weekly decline in the 30-day lookback window. The absolute level — roughly 26.6 million shares — is the lowest in that same window, having peaked near 31 million in early June. Borrowing costs confirm shorts are exiting on comfortable terms: cost to borrow has drifted down to 0.45%, near its lowest reading of the past month. The borrow market has also loosened dramatically. Availability has surged to 1,865% — meaning there are now nearly nineteen shares available to lend for every one currently borrowed. That compares to just 504% a fortnight ago. Shorts are leaving, and the lending market has plenty of room if new ones want to enter. Short pressure, in short, has essentially evaporated.
Options positioning tells a different and more cautious side story. The put/call ratio is running at 2.45, well above its 20-day average of 2.38 and close to the upper end of the recent range — though still far below its 52-week peak of 4.73. That elevated PCR has been a persistent feature for WDC over recent weeks rather than a fresh spike, suggesting options traders are maintaining structural hedges even as the stock rallies. The z-score of 0.65 confirms the reading is elevated but not extreme. It is not the aggressive bear bet the headline PCR number might imply — more a baseline caution that has not yet been shaken off.
The analyst community has turned decisively constructive in one of the busiest weeks of target revisions in recent memory. Morgan Stanley raised its target to $650 this morning — from $488 — while maintaining Overweight. JP Morgan lifted to $650 from $530 on Thursday. Mizuho moved its target to $685, Citigroup to the same level, and Barclays to $620. Every firm named here maintained a positive rating; not a single downgrade appears in the recent changes list. The consensus mean target now sits at $554, actually below the current price of $562.93 — a sign that the stock has outrun even the most recently revised forecasts. The bull case centres on HDD market strength, data centre demand, and WDC's 44TB HAMR drives and UltraSMR contracts. Bears point to industry oversupply risk and unresolved questions about HAMR adoption timelines. The ORTEX short score has fallen to 45.5 from 54.7 two weeks ago, consistent with bears stepping back. EPS momentum scores are strong — 81st percentile on the 30-day window, 83rd on 90-day — reflecting a wave of positive analyst earnings revisions.
Among peers, STX rose 9.9% on the week, closely tracking WDC's move. SNDK was the standout, surging 27%, suggesting sector-wide tailwinds rather than a WDC-specific catalyst. SMCI bucked the trend sharply, falling 26.8% — a reminder that not all hardware names are catching the same bid.
The next scheduled catalyst is WDC's earnings report on July 30. The most recent print in late April produced a 4.5% gain the next day and a 12.4% move over the following week. With the stock now trading above the consensus analyst price target and shorts having covered aggressively, the July print becomes less about sentiment and more about whether the underlying HDD demand story can justify a multiple that has expanded materially — the P/E has moved to 41.5, up 3.6 points over the past 30 days.
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