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On Tuesday, Citi analysts adjusted the price target for Seagate Technology (NASDAQ:STX) shares, bringing it down to $115 from the previous $125, while still maintaining a Buy rating on the stock. According to InvestingPro data, the stock appears undervalued at its current price of $90.51, with analyst targets ranging from $68 to $150. The company maintains a GREAT financial health score of 3.04 out of 5, suggesting strong fundamentals. The revision reflects modest changes to the firm’s financial model, which now includes the effects of the global minimum tax set to impact the company starting in fiscal year 2026. This adjustment was slightly counterbalanced by increased gross margin (GM) assumptions based on ongoing favorable industry dynamics and significant progress with Heat-Assisted Magnetic Recording (HAMR) technology.
The analysts at Citi remain optimistic about the Hard Disk Drive (HDD) market, citing recent expert commentary that suggests stable HDD production plans and continued strong demand through calendar year 2025. This optimism is supported by Seagate’s impressive revenue growth of 24.17% over the last twelve months, with analysts expecting continued sales growth this year. As a prominent player in the Technology Hardware industry, Seagate has demonstrated its market resilience by maintaining dividend payments for 15 consecutive years, currently offering a 3.18% yield. They also noted that there are currently no signs of inventory accumulation among cloud service providers. In fact, some cloud vendors are reportedly maintaining inventories so tight that they would prefer to have slightly more stock on hand.
Looking to the future, industry checks indicate that the growth in nearline storage will continue to be driven by the creation and storage of large datasets, such as video data. There is also a noted uptick in the deployment of support services for Artificial Intelligence (AI) Training Services, which is starting to drive HDD demand, although this impact is still considered minimal at present.
Despite the positive outlook for the HDD industry, which benefits from strong demand and limited supply, Citi analysts acknowledge that macroeconomic uncertainty remains a key factor influencing the potential for further growth in the HDD sector. With this backdrop, they reaffirm their Buy rating but have revised the price target down to $115 to account for these considerations. The company’s solid fundamentals are reflected in its P/E ratio of 16.18 and strong earnings yield of 5%. For deeper insights into Seagate’s valuation and growth prospects, including additional ProTips and comprehensive financial analysis, visit InvestingPro, where you’ll find the detailed Pro Research Report covering what really matters for informed investment decisions.
In other recent news, Seagate Technology has been the focus of several analyst updates, highlighting its financial performance and market potential. Mizuho (NYSE:MFG) Securities reported that Seagate’s revenue and earnings per share for the December quarter exceeded consensus estimates, with figures reaching $2.33 billion and $2.03, respectively. The firm also noted a significant improvement in gross margins, which increased by 220 basis points to 35.5%. Rosenblatt Securities raised its price target for Seagate to $150, maintaining a Buy rating, and cited the company’s promising position in a robust product and demand cycle.
Northland analysts also increased their price target to $160 following Seagate’s higher-than-expected earnings, driven by gross margin expansion. Morgan Stanley (NYSE:MS) expressed continued confidence in Seagate by raising the stock’s price target to $138, maintaining an Overweight rating, and highlighting expectations of positive earnings per share revisions. Baird analysts reiterated an Outperform rating with a $120 price target, emphasizing the long-term growth potential fueled by AI-driven demand for hard disk drives.
Seagate’s recent introduction of higher density HDDs and advancements in HAMR technology have been pivotal in boosting its market position. Despite a $200 million revenue impact due to supply chain issues, the resolution of these challenges has set a positive tone for future quarters. These developments reflect a strong belief among analysts in Seagate’s ability to capitalize on current market dynamics and maintain its competitive edge.
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