Western Digital Stock Slips After Storage Devices Maker Preannounces Q2 Earnings Shortfall But Retail Stays Bullish

San Jose, California-based Western Digital, a provider of data storage devices and solutions, preannounced its fiscal 2025 second-quarter results, sending its stock lower in Thursday’s after-hours session.

In a filing with the SEC, Western Digital said it expects second-quarter revenue at the mid-point of the previous guidance range of $4.20 billion to $4.40 billion. 

The company preannounced quarterly non-GAAP earnings per share (EPS) at the low end of the guidance of $1.75-$2.05. It blamed the anticipated softness on a challenging pricing environment for its flash business.

Analysts, on average, expect the company to report non-GAAP EPS of $1.83 and revenue of $4.24 billion. This compares to the year-ago loss per share of $0.69 and revenue of $3.03 billion.

Western Digital CEO David Goeckeler hinted at flash price weakness at a Barclays Technology conference in mid-December. The executive said NAND pricing challenges will likely persist into the March quarter. 

NAND is a type of flash memory used in devices such as smartphones, portable SSDs, internal SSDs, and memory cards. 

Western Digital is in the process of spinning off its hard disk drive (HDD) and flash businesses, creating two independently traded public companies. The plan was first announced in October 2023. 

On the first-quarter earnings call, CEO Goeckeler said the company completed the soft spin phase at the start of the second quarter and it was working on critical workstreams needed as it makes significant progress on the regulatory filings required in connection with the spin.

The mixed preannouncement did not temper retailers’ sentiment toward Western Digital stock. On Stocktwits, sentiment toward the stock stayed ‘bullish’ (67/100) and message volume rose to ‘high’ levels.

WDC sentiment and message volume January 17, 2025, as of 12:53 am ET | Source: Stocktwits

However, sell-side analysts have tempered their expectations concerning Western Digital. BofA Securities lowered the price target for the stock to $80 from $89 on Thursday, citing lowered 2025 estimates and the roll over of the valuation basis to calendar year 2026 estimates,  TheFly reported.

The firm also said near-term estimates are depressed as both NAND and HDD businesses come off a cyclical downturn.

A week ago, Evercore ISI reduced its estimates for the December and March quarters, blaming the action on a weaker flash pricing environment. However, the firm is bullish on Western Digital stock as it believes that investors will look past the flash weakness and focus on the strength in the HDD business and the upcoming split.

Western Digital stock fell 0.70% to $63.80 in the after-hours session. The stock rose about 14% in 2024 and has gained nearly 8% so far in January.

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