How are energy investors positioned?
Investing.com -- Cantor Fitzgerald upgraded Seagate Technology to Overweight from Neutral, saying the hard drive maker remains well-positioned to benefit from rising cloud storage demand even as the company issued a slightly weaker-than-expected forecast for the current quarter.
Seagate projected September-quarter revenue of $2.50 billion and adjusted earnings of $2.30 per share, both slightly below consensus estimates of $2.53 billion and $2.36, respectively.
Cantor said the miss was due to the slower growth in its enterprise business, which is tied to technology transitions like the ramp-up of HAMR drives, and to dilution from Seagate’s higher stock price and convertible notes.
Still, the brokerage pointed to several positives. Gross margin guidance of 38.8% for the quarter topped consensus of 37.2%, and Seagate plans to resume share buybacks, aided by declining net leverage, now at 1.8 times.
Cantor also highlighted strong demand from hyperscale cloud providers and ongoing visibility into orders extending into the second half of 2026.
The firm raised its 2026 earnings forecast to $11 per share from $10.60, versus a consensus of $10.45, with a potential upside scenario of $12.
For fiscal 2028, Cantor sees earnings reaching $16.00 if Seagate hits its revenue targets.
Despite Seagate shares gaining 77% year-to-date, Cantor said there is further room for upside, recently lifting its price target to $175.
The firm sees the broader re-rating of the hard disk drive industry still in its early stages, noting the stock could approach $250 over the next few years if trends hold.
Shares fell following the guidance miss, but Cantor said a pullback would be an entry point for investors.