Western Digital has recovered sharply from last week's sector-wide selloff, with the stock up 6% to $563 and short sellers quietly retreating — the combination sets up an interesting pre-earnings positioning read with results due July 30.
The reversal in short positioning is the most striking development of the past week. Short interest has dropped nearly 10% in seven days, falling to 6.6% of the free float — down from roughly 9% at the start of June. That unwind has been swift and deliberate: from peak levels near 31 million shares in early June, the short book has shed close to 8.5 million shares in six weeks. The borrow market tells the same story in different language. Availability has loosened dramatically — from around 500% in early June to over 3,000% now — meaning there are roughly 30 shares available to borrow for every one currently shorted. Cost to borrow has edged up slightly on the week to 0.43%, but at that level it remains essentially free. There is no squeeze pressure here. Shorts are leaving on their own terms, not being forced out.
Options positioning adds a meaningful wrinkle. The put/call ratio collapsed to 1.73 on July 14 — more than two standard deviations below its 20-day average of 2.43, which is itself the lowest reading since the 52-week floor of 0.54. The sharp drop in the PCR suggests options traders rotated sharply toward calls on Tuesday, a marked shift from the heavy put bias that has dominated for months. Whether that reflects pre-earnings optimism or simply a roll of expiring hedges, it breaks a long-running defensive posture in the options market.
The Street is increasingly aligned on the bullish side, and targets are moving fast. Citigroup lifted its price target to $800 — from $685 just six weeks earlier — while maintaining its Buy rating. Wells Fargo raised to $730 from $575. B of A Securities moved to $732 from $610. The consensus mean target is $631, which implies roughly 12% upside from current levels, though Cantor Fitzgerald's $900 target and Citigroup's $800 create meaningful skew at the top. The one outlier is Susquehanna, which lifted its Neutral target to $500 from $360 — below where WDC is already trading — signalling the sceptics are upgrading their range but not their conviction. EPS momentum factor scores rank in the 99th percentile on a 30-day basis and the 97th on 90 days, reflecting a rapid upward revision cycle that underpins the target inflation. The analyst recommendation differential score ranks in the 98th percentile — almost no one on the Street is pressing the short thesis from a coverage standpoint.
The consistency note from last week's article is worth flagging explicitly: that piece described WDC closing at $532 after a 17% weekly decline, with short interest near 7.3% of float. Both have since changed in the same direction — the stock has recovered to $563 and short interest has eased further to 6.6%. The peer group has recovered in parallel: STX is up 6% on the week and SNDK has gained 8.7%, confirming the same sector-wide dynamic that drove the selloff has now partially reversed.
The last earnings print — April 30 — produced a 4.5% gain the next day and a 12.4% move over the following five sessions. With Q1 results due July 30, the next two weeks will test whether the combination of retreating shorts, rising analyst targets, and a sharp options sentiment shift is pricing in another upside beat, or simply catching up to where the stock was before last week's sector dip.
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