WDC Bulls Raise Targets as Shorts Quietly Exit

Western Digital enters July with a notable split in its story: the Street is growing more bullish by the week, short sellers are heading for the exits, and yet the stock pulled back 5% over the past week to $638.72 — sitting below most newly raised price targets.

The most striking development is the wall of analyst upgrades. BofA's Wamsi Mohan lifted his target to $732 on July 1, maintaining a Buy. That follows Cantor Fitzgerald raising to $900 on June 29, Morgan Stanley to $650 on June 15, and JPMorgan to $650 on June 12. Every major firm that has moved in the past month has raised its target, none has cut a rating, and the mean price target now stands at $590 — but with the latest cluster running well above that level, the real directional message from the Street is that $590 understates where consensus is heading. The analyst recommendation factor score ranks in the 98th percentile of the ORTEX universe, a near-perfect reading.

Short positioning reinforces the bullish lean. Bears have been unwinding steadily — short interest in WDC has fallen roughly 16% over the past month, dropping to around 7.3% of the free float from above 9% in late May. The borrow market is exceptionally loose: availability has exploded to 3,558%, meaning roughly 35 shares are available to lend for every one currently borrowed. That is a dramatic reversal from late May and early June, when availability was closer to 450-500% and the stock was seeing more active shorting. Borrowing costs are trivial at 0.47% annualised, barely changed in any meaningful direction. There is simply no pressure in the lending market, and the short score has eased from 46.2 on June 19 to 43.1 today — moving away from territory where short sellers were more aggressive.

Options positioning tells a genuinely different story, and it deserves its own read. The put/call ratio has dropped to 1.38 — almost three standard deviations below its 20-day average of 2.33, and near the 52-week low of 0.54. For most of May and June, WDC options had a heavy put bias, with the PCR consistently in the 2.3-2.5 range. The sudden collapse toward call dominance over the past two sessions suggests a sharp repositioning: either protective hedges are being lifted, or fresh call buying has arrived. Either interpretation points to a more constructive near-term setup in derivatives.

The bull case for WDC rests on its duopoly position in hard disk drives alongside STX, surging data centre demand, and a recent earnings print that showed revenue up 45.5% year-over-year with gross margins hitting 50.5%. Valuation has re-rated alongside: the forward PE has expanded roughly 9 points over the past 30 days to 46.6x, and EV/EBITDA runs near 33x — rich by hardware standards, which is precisely the bear case. The company remains exposed to SSD commoditisation and Asian supply-chain risk, and the bear camp notes that the HDD cycle, while strong now, has historically been volatile. EPS momentum factor scores in the 86th-87th percentile suggest estimates are still moving up, but the forward earnings yield factor sits at just the 3rd percentile — a valuation signal that won't be ignored.

Peer behaviour is mixed: close peer STX fell 7% on the week, broadly tracking WDC's weakness, while SNDK surged 16% over the same period — a divergence that may reflect stock-specific restructuring stories rather than a read-through on the sector. The next scheduled catalyst for WDC is earnings on July 30 — the prior print in late April produced a 4.5% next-day gain and a 12.4% move over the following five days, a pattern worth tracking as the print approaches.

Overall, the positioning picture looks constructive rather than crowded: shorts are retreating, borrow is abundant, and options are turning from defensive to neutral-to-bullish, even as the stock digests a week of selling pressure. The key tension heading into the July 30 print is whether WDC's premium valuation — now well above where most targets were set just six weeks ago — can be sustained by another strong data-centre demand signal.