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On Friday, BNP Paribas (OTC:BNPQY) Exane analyst Karl Ackerman upgraded Seagate Technology shares from Underperform to Neutral, significantly increasing the price target to $100 from the previous $65. The upgrade comes as Seagate’s stock, currently trading at $107.85, has shown remarkable momentum with a 12.25% gain in the past week. According to InvestingPro data, 14 analysts have recently revised their earnings expectations upward, reflecting growing confidence in the company’s prospects. Ackerman’s reassessment follows a recent investor dinner with Western Digital (NASDAQ:WDC) executives, which bolstered his confidence in the hard disk drive (HDD) industry’s prospects.
During the event, Seagate’s industry peers shared insights that highlighted structural changes and a shift towards a higher mix of data center usage. These factors have led to hyperscale companies entering into long-term volume commitments, which in turn supports a more stable outlook for Seagate. The company’s strong positioning is reflected in its "GREAT" Financial Health Score on InvestingPro, with projected revenue growth of 38% for fiscal year 2025. Ackerman pointed out that these industry dynamics were key drivers behind the decision to upgrade Seagate’s stock rating.
Despite the upgrade for Seagate, Ackerman expressed a preference for Western Digital, citing its price-to-earnings (P/E) ratio being two turns lower than that of Seagate, which currently trades at a P/E of 15.23. He set a target price for Western Digital at $62, based on 11 times the calendar year 2025 earnings per share (EPS), while maintaining an Outperform rating for Western Digital.
The adjustment in Seagate’s stock rating and price target reflects a significant shift in the analyst’s view of the company’s position within the HDD market. Ackerman’s comments suggest that the long-term agreements with hyperscalers could provide a more predictable revenue stream for Seagate, which has been factored into the new neutral rating and increased price target. For deeper insights into Seagate’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which provides detailed analysis of the company’s financial health, market position, and future outlook.
In other recent news, Seagate Technology has been at the forefront of several significant developments. The company recently reported financial results that surpassed expectations, with a notable year-over-year sales increase of 30%, despite a sequential dip of 7.3%. Analysts from Benchmark have reiterated a Buy rating on Seagate, maintaining a price target of $120, citing strong demand for Nearline products and anticipated improvements in profit margins and cash flow. Additionally, Mizuho (NYSE:MFG) Securities raised its price target for Seagate to $110, highlighting the successful progress of Seagate’s Heat-Assisted Magnetic Recording (HAMR) technology and its potential for further margin expansion.
Seagate’s strategic initiatives include a $400 million senior notes offering by its subsidiary, aimed at financing the redemption of existing notes. This move is expected to optimize the company’s financial structure. Meanwhile, Kerrisdale Capital has provided a bullish outlook on Seagate, emphasizing its leading role in the hard disk drive market and its technological advancements, particularly in HAMR technology. The firm noted the potential for a substantial re-rating of Seagate’s stock value, given its current trading position. Furthermore, Rosenblatt analysts have indicated that Seagate, along with other memory companies, could benefit from increased AI development due to new partnerships between U.S. tech firms and Saudi Arabia. These developments collectively underscore Seagate’s strategic positioning and the positive sentiment surrounding its future prospects.
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