Why Is This Analyst Bearish On Western Digital And Sees Downside?

Benchmark analyst Mark Miller maintained a Sell rating on Western Digital Corp WDC with a $28 price target.
Miller held a conference call with WDC management. He remains concerned about the impact of the down cycle on Western Digital’s balance sheet.
Overall, the industry continues to be rational in supply.
Samsung Electronics Co, Ltd SSNLF continues to invest in NAND outside of China to replace NAND supply to Apple Inc AAPL due to U.S. restrictions on YMTC.
NAND pricing remains challenging, but the price declines this quarter will likely be lower than those reported in the September quarter.
Western Digital has not seen it, but there could be some pockets of the market with irrational pricing.
Western Digital’s hyper-scale customers are going through a digestion period that could last multiple quarters.
Kioxia and Western Digital jointly determined wafer starts and spending.
The recent cuts in client HDD will have no impact on head development. Overall, HDD nearline pricing has been benign.
Western Digital has reduced its FY23 planned capex spending by 20% to 25%.
The $1.1 billion in debt due in 2024 will likely be refinanced.
Price Action: WDC shares traded lower by 0.51% at $32.05 on the last check Friday.