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On Friday, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for shares of Seagate Technology (NASDAQ:STX), decreasing the price target from $110.00 to $107.00, while reaffirming an Outperform rating on the company's stock. The company, currently valued at $20.1 billion, trades near InvestingPro's Fair Value estimate, with analyst targets ranging from $65 to $150.
The revision follows a reassessment of the March quarter estimates, which have been revised down from $2.33 billion in revenue and $1.88 in earnings per share to $2.12 billion and $1.73 respectively. This adjustment comes as the company faces headwinds related to equipment ramps in the first half of 2025.
The firm noted several key points in its analysis, including the qualification of Seagate's HAMR Mozaic technology at its first Cloud Service Provider customer. Additional qualifications are anticipated in the first half of 2025, which is expected to support strong demand from hyperscalers due to AI technology ramps.
With revenue of $7.26 billion in the last twelve months and a steady 3.03% dividend yield maintained for 14 consecutive years, Seagate shows strong fundamental positioning. InvestingPro data reveals several more key insights about Seagate's financial health and growth prospects.
Despite a $200 million revenue impact in the March quarter due to ramp-up challenges from previously unused equipment, gross margins are projected to remain stable, benefiting from a higher mix of enterprise products.
Mizuho's analysts also pointed out that their forecasts for volume ramps of HAMR technology in the second half of 2025 remain unchanged. The firm underscored that technological advancements in Mozaic 3+/4+ areal density are showing improvement over previous generations and are gaining significant customer traction, which is likely to drive better margins.
In conclusion, despite the near-term capacity headwinds, Mizuho's commentary highlighted Seagate's strong positioning for the upcoming HAMR technology ramps. The firm's analysts believe that the company's strategic moves and technological advancements will help Seagate navigate through the current challenges while maintaining a favorable outlook.
With earnings scheduled for January 21, 2025, investors seeking deeper insights can access Seagate's comprehensive Pro Research Report, along with additional financial metrics and analysis, through InvestingPro's extensive database of over 1,400 US stocks.
In other recent news, Seagate Technology's fiscal second quarter revenue is on target, despite production delays that may impact the fiscal third quarter. The company anticipates a potential reduction in revenue by up to $200 million due to a shortfall in production. However, Seagate has successfully completed qualification testing for its Heat-Assisted Magnetic Recording (HAMR) based Mozaic drives, indicating readiness for the next phase of deployment.
Benchmark analyst has maintained a Hold rating on Seagate's stock, citing strong cloud demand as a key driver. The analyst also mentioned the potential for margin improvement due to the integration of Artificial Intelligence (AI) opportunities. For fiscal year 2026, Seagate's non-GAAP earnings are projected at $8.44 per diluted share, with sales estimated at $10.1 billion.
Seagate's fiscal first quarter 2025 results showed a significant increase in revenue to $2.17 billion and non-GAAP EPS of $1.58. The company's gross margin reached 33.3%, the highest in over a decade. Looking ahead, Seagate is optimistic about the demand for mass capacity drives and future growth leveraging HAMR technology. These are the recent developments for Seagate Technology.
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