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Mizuho raises Seagate stock target, maintains buy rating

EditorAhmed Abdulazez Abdulkadir
Published 31/05/2024, 13:02
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On Friday, Mizuho showed confidence in Seagate Technology (NASDAQ:STX) by increasing the firm's price target on the company's shares from $100 to $110, while retaining a Buy rating. The adjustment follows a detailed evaluation of the company's financial outlook, with projections that Seagate will experience heightened demand from cloud and enterprise sectors.

The analyst at Mizho maintained the revenue and earnings per share (EPS) estimates for the June quarter at $1.85 billion and $0.70 respectively, consistent with the consensus of $1.86 billion and $0.71.

Additionally, the firm expects a rise in the fiscal year 2025 (ending in June) revenue estimate from $8.8 billion to $8.9 billion and EPS from $5.50 to $5.66, slightly above the consensus of $8.82 billion and $5.59. For fiscal year 2026, the estimates were also raised from $10.2 billion and an EPS of $7.82 to $10.4 billion and $8.38, compared to a consensus of $10.1 billion and $8.19.

The revised price target of $110 is based on approximately 19.4 times the firm's estimated earnings for fiscal year 2025, which represents a discount to the broader semiconductor index (SOX) trading at around 23 times earnings. The firm's projections are underpinned by an anticipated increase in earnings per share of nearly 6 times year-over-year.

The optimism for Seagate's future is partly attributed to the growing need for storage solutions driven by advancements in artificial intelligence on devices, which is expected to contribute to Seagate's performance in the coming years. The company is poised to benefit from these trends as it continues to serve the expanding cloud and enterprise demand.

InvestingPro Insights

Seagate Technology (NASDAQ:STX) has been a topic of interest among analysts, with Mizuho recently upping their price target. In alignment with such perspectives, InvestingPro offers additional insights. Notably, 16 analysts have revised their earnings upwards for the upcoming period, signaling a positive sentiment towards the company’s future performance. Furthermore, Seagate has maintained dividend payments for 14 consecutive years, which may appeal to income-focused investors. This is particularly noteworthy given the company's impressive return over the last year, as reflected by a 61.98% one-year price total return.

Examining real-time data from InvestingPro, Seagate's market capitalization stands at $19.68 billion, with a notable revenue of $6.266 billion over the last twelve months as of Q3 2023. Despite a revenue decline of 25.49% during the same period, the company's dividend yield remains attractive at 2.99%. Investors should also be aware of the upcoming earnings date on July 18, 2024, which could provide further indication of the company's trajectory.

For those considering a deeper dive into Seagate's financial health and future outlook, InvestingPro provides additional tips and metrics to aid in investment decisions. By using the coupon code PRONEWS24, investors can access these resources at a discounted rate for a yearly or biyearly Pro and Pro+ subscription. Currently, there are 11 additional InvestingPro Tips available, offering a comprehensive analysis for Seagate Technology.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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