It’s time to move to the margin at Western Digital, according to Deutsche Bank. Sydney analyst Ho lowered the stock’s rating for holding it off the buy, indicating weak demand ahead. The analyst also lowered the share price target to $40 from $56. The new target points to a roughly 9% rise from Monday’s close. “We believe WDC’s F1Q (September) earnings and earnings per share fall below minimum guidance, and the F2Q (December) forecast is also likely to be well below Street’s current estimate,” Hu wrote in a note on Monday. “Demand has deteriorated over the course of the current quarter as MU and STX have already revised their forecasts, but our recent industry checks indicate that stock adjustments and Flash ASP erosion are likely to continue for at least the next two quarters, and we note that demand is seasonally weak in the first hour.” CY23,” he added. Western Digital is down about 44% this year, and about 47% from its 52-week high, as the data storage maker struggled with sluggish demand and supply chain issues. The analyst expects these concerns to continue to head into the holiday season, citing supply chain checks that point to more headwinds. Hu recommends that investors hold the stock until the balance of supply and demand returns. “What we are particularly concerned about is that the WDC now expects free cash to be negative in fiscal year 23 (ending June 2023),” Hu wrote. “While we won’t see a major downside to the current stock price as the stock is trading at ~1.0x EV/Sales, we are also struggling to see any meaningful upside in the next 6-9 months as the oversupply continues in the flash memory market and Overall concerns intensify.” The stock was down 2.3% midday on Tuesday. CNBC’s Michael Bloom contributed to this report.