Western Digital (WDC) Valuation Check After Strong Recent Share Price Momentum

Simply Wall St.01-12

AdvertisementWestern Digital’s Recent Performance in Focus Western Digital (WDC) has drawn investor attention after a period of strong share price moves, with the stock showing sizable gains over the ...

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At a last close of US$200.46, Western Digital now sits well above its month and past 3 months returns, which themselves already reflect double digit gains. This has prompted closer scrutiny of whether recent performance aligns with the company’s fundamentals. See our latest analysis for Western Digital. The recent 13.68% 1 month share price return and 77.19% 3 month share price return, on top of a very large 1 year total shareholder return, suggest momentum has been building as investors reassess Western Digital’s growth potential and risks. If Western Digital’s run has you thinking about what else is moving in tech, this could be a good moment to look at high growth tech and AI stocks as potential next ideas. With Western Digital trading around US$200, headline valuations and an indicated intrinsic discount of about 28% are sending mixed signals. Is this price still leaving meaningful upside on the table, or is the market already baking in future growth? Most Popular Narrative: 7.2% Overvalued Compared with Western Digital’s last close of US$200.46, the most followed narrative points to a fair value of about US$187, implying the share price sits modestly above that estimate while still reflecting solid business momentum.  Analysts have nudged our Western Digital fair value estimate higher to about $187 per share from roughly $181, reflecting stronger than expected enterprise HDD and NAND demand, improving pricing and margin dynamics, and higher forward valuation multiples following a series of Street price target hikes into the $135 to $200 range.  Read the complete narrative. Curious what earnings path and long term margin profile could justify that higher fair value, even with a lower future P/E than many peers? The full narrative walks through the revenue build, profitability assumptions, and the exact discount rate that tie those pieces together without leaving you to guess the moving parts. Result: Fair Value of $187 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this upbeat story still leans heavily on a small group of hyperscale customers and on the smooth adoption of new HDD technologies, both of which could quickly shift sentiment. Find out about the key risks to this Western Digital narrative. Another Angle on What the Market Is Pricing In Analysts looking at Western Digital’s earnings multiple see a different picture to the narrative fair value of about US$187. At a P/E of 26.4x, the shares sit above both the global tech average of 22.3x and peer average of 19.9x, suggesting the market is already paying a premium. Our fair ratio points to 37.4x, which is far higher than today’s 26.4x. If the market ever moved closer to that fair ratio, it would imply investors are willing to pay much more for each dollar of earnings. However, if sentiment cools, that premium may leave more room for disappointment than for upside. See what the numbers say about this price — find out in our valuation breakdown. NasdaqGS:WDC P/E Ratio as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Western Digital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 881 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Western Digital Narrative If you see the numbers differently or prefer to follow your own process, you can build a full Western Digital story in just a few minutes with Do it your way. A great starting point for your Western Digital research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. Looking for more investment ideas? If Western Digital has caught your eye, do not stop there. Widening your watchlist with focused stock ideas can help you spot opportunities you would otherwise miss.  Target potential value by scanning these 881 undervalued stocks based on cash flows, built around cash flow based opportunities that might sit under the radar of headline P/E ratios. Spot future growth themes by checking out these 28 AI penny stocks, which link artificial intelligence exposure with specific businesses instead of broad sector labels. Strengthen your income options by reviewing these 12 dividend stocks with yields > 3%, which highlight companies with yields above 3% and room for further research.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Western Digital might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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