Seagate stock price target raised to $135 at BofA Securities

On Wednesday, BofA Securities showed a positive stance on Seagate Technology (NASDAQ:STX) by raising the price target on the company’s shares from $125.00 to $135.00. The firm maintained a Buy rating on the stock. The adjustment followed a meeting with Seagate’s CFO Gianluca Romano in New York City on Tuesday, May 27th, which left analysts feeling very encouraged about the company’s medium and long-term goals presented during their investor day. The stock, currently trading at $117.05, has shown remarkable momentum with a 12% gain in the past week alone, according to InvestingPro data.

The analyst expressed confidence in several key aspects of Seagate’s business. These include the company’s roadmap for areal density, its ability to balance supply and demand through market cycles due to a customer base comprising a few very large clients, and Seagate’s cost management capabilities in potential future downcycles. Additionally, the analyst cited the long-term demand for hard disk drives (HDDs) in data centers and the potential for higher margin levels due to a product mix shift towards Heat-Assisted Magnetic Recording (HAMR) technology, which is expected to be achieved without incremental unit capacity investments. The company’s strong execution is reflected in its impressive 36.29% revenue growth and healthy gross profit margin of 33.79% in the last twelve months.

The endorsement from BofA Securities comes with an optimistic outlook on Seagate’s position in the market, particularly noting the secular demand trends from Cloud services. The analyst also pointed to the potential for revenue and margin recovery from current trough levels and the company’s progression towards higher capacity HAMR HDDs.

Seagate Technology, a prominent player in data storage solutions, is expected to benefit from the ongoing growth in cloud computing and data center expansion. The company’s focus on innovation, especially in HAMR technology, is anticipated to contribute to its competitive edge in the industry.

Investors and market watchers will likely keep an eye on Seagate’s performance as it strives to meet the expectations set forth by its recent investor day and as reflected in the updated price target from BofA Securities. With analyst targets ranging from $68 to $140 and 13 analysts recently revising their earnings estimates upward, InvestingPro subscribers can access over 30 additional key metrics and insights about Seagate’s financial health, valuation, and growth prospects through the platform’s comprehensive Pro Research Report.

In other recent news, Seagate Technology has seen several updates from analysts following its Analyst Day event. The company announced ambitious financial targets, including a low-to-mid teens revenue compound annual growth rate (CAGR) from fiscal year 2025 to 2028, with gross margins projected to reach 40%. Additionally, Seagate plans to return over 75% of free cash flow to shareholders and anticipates a significant ramp-up in its 40TB hard disk drives by 2026. Analysts from Morgan Stanley (NYSE:MS), Citi, and Mizuho (NYSE:MFG) have all raised their price targets for Seagate, reflecting confidence in the company’s growth outlook and technological advancements.

Morgan Stanley increased its target to $140, citing Seagate’s leadership in storage technology and a projected EPS of $19 by fiscal year 2028. Citi also raised its target to $140, maintaining a Buy rating and highlighting a $5 billion stock buyback plan. Mizuho set a new target of $130, emphasizing Seagate’s advancements in Heat-Assisted Magnetic Recording (HAMR) technology. Meanwhile, BofA Securities and Cantor Fitzgerald have maintained their respective targets, with BofA setting a $125 target and Cantor Fitzgerald holding a Neutral rating at the same level.

These developments underscore Seagate’s strategic positioning in the data storage market, with analysts noting the potential for increased profitability and market share. The company has successfully qualified its HAMR technology with three major cloud service providers and anticipates further qualifications in the coming months. Seagate’s updated financial model and technological progress have been positively received, with expectations of continued growth driven by increasing data storage demands.

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