Western Digital's profitability will disappoint investors as competitors cut flash memory hard drive prices, according to Cowen.
The firm lowered its rating to market perform from outperform for Western Digital shares, predicting the storage provider will report earnings per share below expectations next year.
Western Digital's "sell-side and buy-side numbers are still way too high for [2019 and 2020], which should create an overhang on the stock," analyst Karl Ackerman said in a note to clients Wednesday. "Our decision rests on our field work that indicates substantial, unabated competitive pricing tactics by [Western Digital], Toshiba and to a lesser extent [Intel] to gain share of enterprise and client SSDs [solid-state drives]."
Western Digital shares are down 4.9 percent Wednesday.
The analyst lowered his price target to $70 from $100 for Western Digital shares, representing 8 percent upside to Tuesday's close.
"We think WDC may have to forfeit market share or margins near term – tackling both at the same time while peers invest in yield improvement is an arduous task that we struggle to support near term," Ackerman said.
He predicts the company's flash memory average selling prices will decline by 27 percent this year and fall 30 percent next year.
Ackerman estimates Western Digital will generate fiscal 2019 earnings per share of $10.97 versus the $11.78 Wall Street consensus.
The company's stock has underperformed the market this year. Its shares are down 18 percent this year through Tuesday versus S&P 500's 6 percent gain.
Western Digital did not immediately respond to a request for comment.
— CNBC's contributed to this story.