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On Wednesday, Summit Insights Group upgraded Seagate Technology stock from Hold to Buy, citing the potential for the company's Heat-Assisted Magnetic Recording (HAMR) Hard Disk Drive (HDD) technology to improve gross margins in the second half of 2025. Summit Insights foresees the current favorable pricing environment and product mix to persist through the latter half of 2025, which could benefit Seagate's financial performance.
The company, currently valued at $21.4 billion, has shown promising momentum with a 19.7% return over the past year. InvestingPro data reveals that Seagate maintains a solid gross profit margin of 28.9% and has consistently paid dividends for 14 consecutive years.
Seagate's HAMR technology is expected to enable the company to increase its HDD capacity points, which could also lead to a reduction in costs for mid to lower-capacity HDDs. This advancement is seen as a significant driver for Seagate's corporate margin, which the firm anticipates could reach the high 30% range as the HAMR-based HDD technology ramps up through 2026.
According to InvestingPro analysis, the company is expected to see significant sales growth this year, with revenue forecast to grow by 41%. For deeper insights into Seagate's growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report, available exclusively on InvestingPro.
The optimism surrounding Seagate's HAMR HDD comes at a time when the data storage industry is looking for innovative ways to increase storage capacity while managing costs. According to Summit Insights, Seagate's technology is positioned to make a substantial impact on its financial metrics, particularly gross margin, by offering higher-capacity drives at a lower cost.
Seagate, listed on (NASDAQ:STX), is expected to leverage its HAMR technology to gain a competitive edge in the HDD market. The upgrade to a Buy rating reflects Summit Insights' confidence in Seagate's strategic direction and its ability to execute on technology developments that have the potential to enhance profitability in the coming years.
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