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On Thursday, Morgan Stanley (NYSE:MS) demonstrated continued confidence in Seagate Technology (NASDAQ:STX) by raising the stock’s price target from $134.00 to $138.00, while maintaining an Overweight rating on the shares. Currently trading at $101.69, the company boasts a market capitalization of $21.6 billion and maintains a "GREAT" financial health score according to InvestingPro analysis. The firm’s analysts are optimistic about the stock’s future performance, citing a sustainable hard disk drive (HDD) cycle and structurally stronger gross margins of 31.75% as key factors.
The analyst at Morgan Stanley, Erik Woodring, emphasized that Seagate Technology remains their top pick within the IT Hardware sector. Woodring’s outlook is based on the belief that the company will continue to see positive earnings per share (EPS) revisions, which could range from 5% to 15% above the Street’s expectations. The company has demonstrated strong financial performance with a consistent 15-year dividend payment history and a current yield of 2.87%. This anticipated growth in earnings is seen as a potential driver for a re-rating of the stock’s multiple.
The update from Morgan Stanley also includes a bullish scenario for Seagate Technology, with a valuation that could reach as high as $170.00. This bull case valuation underscores the firm’s view that there is significant upside potential for the stock, beyond the newly set price target. According to InvestingPro analysis, which offers comprehensive research reports for over 1,400 US stocks, Seagate appears slightly undervalued based on their proprietary Fair Value model.
Seagate Technology’s stock performance will likely be closely watched by investors following this updated guidance from Morgan Stanley. With a year-to-date return of 16.17% and analyst targets ranging from $68 to $150, the revised price target and analyst comments reflect a strong belief in the company’s ability to outperform within its industry. For deeper insights into Seagate’s valuation and growth prospects, investors can access detailed analysis through InvestingPro’s extensive financial metrics and expert research reports.
The endorsement from Morgan Stanley could influence market sentiment and investor decisions regarding Seagate Technology shares. As the market responds to this new information, attention will be on the company’s ability to meet or exceed the robust financial expectations set forth by analysts.
In other recent news, Seagate Technology has seen several positive developments that are of interest to investors. The company reported earnings and revenue that surpassed consensus estimates, with revenue reaching $2.33 billion and earnings per share at $2.03, according to Mizuho (NYSE:MFG) Securities. Analysts at Northland highlighted Seagate’s higher-than-expected earnings, driven by increased gross margins, and subsequently raised their price target from $144 to $160. Mizuho also noted significant improvements in Seagate’s gross margins and raised their price target to $115.
Rosenblatt Securities increased their price target for Seagate to $150, maintaining a Buy rating, and cited the company’s robust product and demand cycle as key factors. The introduction of higher density hard disk drives (HDDs) has contributed to Seagate’s highest non-GAAP gross margins in a decade, according to Rosenblatt. Meanwhile, Summit Insights Group upgraded Seagate from Hold to Buy, pointing to the potential of Seagate’s Heat-Assisted Magnetic Recording (HAMR) technology to improve gross margins by the second half of 2025.
Baird analysts reiterated an Outperform rating with a price target of $120, attributing their positive outlook to Seagate’s growth in nearline Exabyte shipments and the increasing demand for data storage driven by AI technologies. They also noted that Seagate’s Mosaic platform could enhance product offerings and financial performance. Overall, the recent analyst updates reflect a strong confidence in Seagate’s strategic direction and its potential to capitalize on current market dynamics.
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