Why Western Digital Stock Declined 28.4% in 2018


Oct. 19 2018, Updated 9:02 a.m. ET

WDC stock down 28.4% this year

Semiconductor company Western Digital’s (WDC) stock price has declined 28.4% year-to-date. The stock is trading 48.0% below its 52-week high of $106.96. Analysts remain concerned over the declining demand for memory chips.

In September, Evercore downgraded several semiconductor stocks. Evercore believes that stocks with exposure to NAND memory chips and analog processors could be negatively impacted over the next 12 months. WDC’s price target was reduced to $75.00 from $100.00, and the stock is trading at $55.76.

RBC’s Amit Daryanani also weighed in on WDC and reduced its price target in September. The analyst expects NAND oversupply to persist until mid-2019, which could impact WDC’s gross margins.

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NAND concerns are not overblown

The ASP (average selling price) for NAND is expected to decline at a low single-digit rate until the first quarter of 2019. After this, the decline is expected to occur at a high single-digit rate until the end of 2019.

This trend has impacted semiconductor stocks Applied Materials (AMAT), Analog Devices (ADI), and Lam Research (LRCX), which are down 31.0%, 3.0%, and 19.0%, respectively, this year.

WDC’s exabytes shipped rose 31.0%, and its HDD (hard disk drive) ASP rose 11.0% in fiscal 2018. However, the NAND and personal computer verticals are experiencing serious headwinds. Its sales are expected to be impacted by tariff regulations and currency fluctuations in fiscal 2019, increasing the stock’s volatility.


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