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On Tuesday, Citi analysts adjusted their outlook on Seagate Technology (NASDAQ:STX) shares, reducing the price target to $115 from the previous $125. The firm continues to endorse a Buy rating on the stock, aligning with InvestingPro’s analysis showing strong financial health metrics and current gross margins of 31.75%. The revision reflects a new model that accounts for the impact of the global minimum tax, which will take effect at the beginning of FY26. This adjustment is partially balanced by slightly higher gross margin assumptions, buoyed by favorable industry dynamics and the significant ramp-up of Heat-Assisted Magnetic Recording (HAMR) technology.
Seagate Technology’s focus on Hard Disk Drives (HDDs) remains positive, supported by recent expert commentary that suggests stable HDD build plans and solid demand through the calendar year 2025. As a prominent player in the Technology Hardware, Storage & Peripherals industry, the company has demonstrated strong revenue growth of 24.17% over the last twelve months. Current observations do not indicate any buildup of inventory at cloud customer facilities, and there are even reports of certain cloud vendors operating with inventories tight enough to warrant a desire for additional stock. In the longer term, the growth in nearline storage is expected to continue, driven by the generation and storage of large datasets, such as video data. A modest increase in the deployment of support services for AI Training Services is also currently contributing to HDD demand, though this impact is minimal at present.
The HDD industry’s performance continues to benefit from strong demand and limited supply. However, the primary factor influencing further growth in HDDs is the prevailing macroeconomic uncertainty. Despite this, Citi reaffirms its confidence in Seagate Technology’s prospects by reiterating a Buy rating, albeit with a lowered price target of $115. For deeper insights into Seagate’s valuation and growth prospects, including detailed financial health scores and comprehensive analysis, check out the full research report available on InvestingPro.
In other recent news, Seagate Technology has reported notable developments across various financial and operational fronts. Mizuho (NYSE:MFG) Securities highlighted Seagate’s robust performance in the December quarter, with revenue and earnings per share surpassing expectations at $2.33 billion and $2.03, respectively. The firm’s analysts have set their forecast for the March quarter at $2.10 billion in revenue and $1.70 earnings per share, closely aligning with consensus projections. Meanwhile, Northland analysts increased their price target for Seagate to $160, following higher-than-expected earnings driven by increased gross margins. They expect further margin expansion due to Seagate’s areal density roadmap, which allows for premium pricing of high-capacity drives.
Rosenblatt Securities also raised its price target to $150, citing Seagate’s promising position at the beginning of a robust product and demand cycle. The introduction of higher density hard disk drives and HAMR-based HDDs has boosted Seagate’s non-GAAP gross margins to the highest levels in a decade. Morgan Stanley (NYSE:MS) demonstrated confidence in Seagate’s future by raising the stock’s price target to $138, maintaining an Overweight rating. They anticipate positive earnings per share revisions, potentially driving a re-rating of the stock’s multiple.
Citi analysts adjusted their price target to $115, maintaining a Buy rating, reflecting changes in their financial model due to global minimum tax effects. They noted stable HDD production plans and strong demand through calendar year 2025, with no signs of inventory accumulation among cloud service providers. Collectively, these developments underscore a strong belief in Seagate Technology’s ability to capitalize on current market dynamics and product innovation.
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