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On Monday, Citi analysts, led by Asiya Merchant, increased the price target on Seagate Technology (NASDAQ:STX) shares to $125 from the previous $105 while retaining a Buy rating on the stock. Currently trading at $107.89, with a market capitalization of $22.9 billion and a P/E ratio of 15.2, InvestingPro analysis suggests the stock is slightly undervalued. The revision comes ahead of the company’s analyst day, scheduled for May 22, where Seagate is expected to discuss market dynamics and its strategic outlook.
At the upcoming event, Seagate is anticipated to address sustained strong demand through the end of the year, supported by various sectors including public cloud and enterprise OEM. The company, which has demonstrated strong financial health according to InvestingPro’s comprehensive analysis, is also likely to highlight the ongoing tight supply environment, which has resulted in underserved demand and controlled production capacity. With revenue growth of 36.3% in the last twelve months and 14 analysts revising their earnings estimates upward, this situation is expected to continue providing the company with visibility through at least the first quarter of 2026.
Citi’s analysts predict that Seagate will reveal information about demand drivers that will contribute to the company’s growth, such as the incremental impact from artificial intelligence (AI) technologies. The company’s current gross profit margin stands at 33.8%, and with a strong return on assets of 20.4%, it has demonstrated efficient capital utilization. Additionally, updates on Heat-Assisted Magnetic Recording (HAMR) technology are expected to be a focal point, with the potential to support long-term structurally higher margins compared to the current target margin range for hard disk drives (HDDs).
The company’s progress in its capacity roadmaps and the near-completion of a second hyperscaler qualification, along with new customers in the pipeline, will also be topics of interest during the analyst day. These developments, coupled with Seagate’s capital allocation strategies, are poised to enhance the company’s profitability in the outer years.
Citi’s revised price target is based on a 12 times price-to-earnings (PE) ratio on the next twenty-four months’ estimated earnings per share (EPS), an increase from the previous 11 times PE ratio. The firm’s positive outlook reflects confidence in Seagate’s ability to leverage its manufacturing and supply chain flexibility, along with pricing strategies, to navigate a limited tariff impact and drive future growth.
In other recent news, Seagate Technology has been the focus of multiple significant developments. The company announced a $400 million senior notes offering through its subsidiary, Seagate Data Storage Technology Pte. Ltd., aimed at qualified institutional buyers and certain non-U.S. persons. This offering is intended to finance the redemption of existing notes and related expenses. Additionally, Seagate’s stock rating was upgraded to Neutral by BNP Paribas (OTC:BNPQY) Exane, reflecting a shift in analyst Karl Ackerman’s view due to industry dynamics and long-term volume commitments by hyperscale companies. Mizuho (NYSE:MFG) Securities also increased Seagate’s price target to $110, maintaining an Outperform rating, citing the successful progress of Seagate’s Heat-Assisted Magnetic Recording (HAMR) technology.
Kerrisdale Capital has provided a positive outlook on Seagate, highlighting its significant market share in the HDD market and the promising advancements in HAMR technology. The firm emphasized Seagate’s leadership position in the AI and data center sectors and noted the potential for a substantial re-rating of the stock value. Furthermore, Seagate is expected to benefit from increased AI development, as noted by Rosenblatt analysts, who see positive implications for memory and storage companies due to new AI partnerships between U.S. tech firms and Saudi Arabia. These developments underscore Seagate’s strategic moves and technological advancements, capturing the attention of investors and analysts alike.
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