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Investing.com - BofA Securities has raised its price target on Seagate Technology (NASDAQ:STX) to $320 from $275 while maintaining a Buy rating on the data storage company. The new target represents significant upside from Seagate’s current price of $259.14, with the stock already delivering an impressive 205% return year-to-date.
The price target increase follows an investor meeting with Seagate’s investor relations team in Fremont, California, as part of BofA’s hardware bus tour. BofA cited improved supply and demand balance in the hard disk drive (HDD) industry and build-to-order contracts that typically span 3-4 quarters as key factors behind the adjustment. InvestingPro data shows 17 analysts have recently revised their earnings upwards for Seagate, suggesting growing confidence in the company’s outlook.
According to BofA, Seagate management views these industry changes as structural and reports that the company is operating at maximum utilization. The company plans to meet the mid-20% exabyte demand growth using existing supply capacity and by transitioning customers to its Heat-Assisted Magnetic Recording (HAMR) technology rather than increasing unit production. This strategic approach has contributed to Seagate’s strong financial performance, with revenue growing 31.56% in the last twelve months.
BofA’s new price target represents a multiple of 22x calendar 2027 estimated earnings per share of $14.66, up from the previous 19x multiple. The firm justified the higher multiple based on increased confidence in positive estimate revisions over the long term and sustainable margins. While Seagate currently trades at a P/E ratio of 33.38, its PEG ratio of just 0.32 suggests it may be undervalued relative to its growth potential, according to InvestingPro metrics.
The investment bank reiterated its Buy rating on Seagate, citing secular demand from cloud computing, revenue and margin improvements, and the company’s path to higher capacity HAMR hard disk drives. Seagate has maintained dividend payments for 15 consecutive years, currently yielding 1.14%, while delivering a 144.3% price return over the past six months. For deeper insights into Seagate’s valuation and growth prospects, InvestingPro offers a comprehensive research report with expert analysis on this prominent player in the storage industry.
In other recent news, Seagate Technology Holdings plc has completed a $500 million note exchange involving its subsidiary’s 3.50% Exchangeable Senior Notes due 2028. The transaction included approximately $503.4 million in cash and around 4.3 million shares of Seagate stock. Analysts have responded positively to Seagate’s recent developments. TD Cowen has raised its price target for Seagate to $340, maintaining a Buy rating, citing positive sentiment and strong fundamentals. Cantor Fitzgerald also increased its price target to $400, highlighting the hard disk drive market dynamics and ongoing demand exceeding supply through 2026. Benchmark raised its price target to $255, following Seagate’s fiscal first-quarter results that surpassed expectations and strong guidance for the second quarter. These updates reflect a continued optimistic outlook from analysts regarding Seagate’s performance and market position.
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