Western Digital Slammed With Second Bear Note This Month

Western Digital Corp (NASDAQ:WDC) is continuing its downward spiral, after RBC downgraded the stock to "sector perform" from "outperform" and slashed its price target by 26% to $70. RBC -- the second firm to hand out a downgrade on the computer hardware stock this month -- cited concerns over NAND demand, which could weigh on margins going forward. Overall, analyst attention is evenly split between "strong buy" and "hold" recommendations for the 20 firms covering the security. At last check, WDC is down 4% at $54.78, already hitting an annual low of $54.64.

Western Digital stock has been in a downtrend since touching a three-year peak of $106.96 March 16. In fact, WDC had already shed more than 44% over the past six months coming into today, and the chip stock is now standing in extreme undersold territory, per its 14-day Relative Strength Index (RSI) of 18.

Looking toward sentiment data, the chip stock's Schaeffer's put/call open interest ratio (SOIR) is 0.92, showing a preference for calls among near-term options traders. Reinforcing this is data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which shows call buying has more than doubled put buying during the past 10 days.

Lastly, short interest rose nearly 12% during the most recent reporting period, and now represents a healthy 3% of the stock's total available float. At Western Digital stock's average daily trading volume, it would take shorts less than two days to cover their bearish bets.