Bank of America Securities analyst Wamsi Mohan has maintained their bullish stance on STX stock, giving a Buy rating on January 19.
Wamsi Mohan has given his Buy rating due to a combination of factors affecting Seagate Technology’s (STX) market position and financial outlook. Seagate’s introduction of its Mozaic 3+ platform, which incorporates cutting-edge nanophotonic laser technology, is seen as a pivotal development in the hard disk drive (HDD) market. The company’s expectation to ship 1 million Heat Assisted Magnetic Recording (HAMR) drives in the first half of calendar year 2024, with potential for increased shipments thereafter, is indicative of early success and anticipated qualification with major Hyperscaler clients. This innovation is expected to transition the company’s portfolio towards HAMR technology, leading to margin benefits when compared to competitors still using Conventional Magnetic Recording (CMR) technology. Mohan maintains a Buy recommendation, encouraged by the improving demand climate and expanding margins that should lead to positive financial revisions for Seagate.
Furthermore, the analysis suggests that the demand for HDDs is reaching a turning point, with cloud computing capital expenditures stabilizing and forecasted to increase significantly in the following year. This expected reacceleration in cloud spending, particularly among major Cloud Service Providers (CSPs) in the United States and China, should bolster demand for storage solutions, from which Seagate is well-positioned to benefit. The report also considers the normalization of HDD inventory levels among Hyperscalers and the rising demand driven by Artificial Intelligence workloads as positive indicators for future demand for Seagate’s HDD and HAMR drives. Despite the underutilization charges that have affected Seagate recently, the report outlines an improving cost structure that supports margin growth and suggests potential for upward revisions in revenue and margins in upcoming financial guidance.
In another report released on January 19, Rosenblatt Securities also maintained a Buy rating on the stock with a $100.00 price target.
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Based on the recent corporate insider activity of 49 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of STX in relation to earlier this year.
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Seagate Tech (STX) Company Description:
Seagate Technology Plc engages in the development, production, and distribution of data storage products and electronic data storage solutions. Its products include hard disk drives, solid state hybrid drives, solid state drives, peripheral component interconnect express cards, serial advanced technology attachment controllers, storage subsystems and computing solutions. It offers its products under the Backup Plus and Expansion product lines, and Maxtor and LaCie brands. The company was founded by Finis Conner, Syed Iftikar, Doug Mahon, David Thomas Mitchell, and Alan F. Shugart in 1978 and is headquartered in Dublin, Ireland.
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