Seagate Technology PLC (STX) Shares Under Pressure; Top Analyst Weighs In


Seagate Technology PLC (NASDAQ:STX) shareholders are certainly not loving the latest numbers posted by the data storage giant, sending shares down nearly 16%. Seagate reported fiscal third-quarter revenue that missed Wall Street’s expectations, and forecast a drop in revenue this quarter, citing in part a shortage of components that may restrain some computing equipment that happens to use Seagate drives.

Mizuho’s top analyst Vijay Rakesh commented, “While the topline was modestly light of expectations, STX noted it was: 1) not serving the <500GB HDD market (~25% of market), 2) impacted by NAND availability of ~$50M in the quarter, and 3) tight DRAM/NAND could impact 2H PC/server demand. We believe a lack of in-house NAND is a disadvantage versus WDC, which could have a better guide given strong NAND trends as noted by Hynix.”

“We believe near-term HDD remains stable with PC and nearline demand, and tight NAND slowing HDD substitution. But, STX is impacted from lack of in-house NAND, affecting its high margin Cloud/Silicon revenues. We are hosting Nimbus Data for meetings in NYC/Boston on May 11/12,” the analyst concluded.

As such, Rakesh reiterates a Neutral rating on Seagate shares, with a price target of $40, which represents a potential downside of 6% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Vijay Rakesh has a yearly average return of 28.2% and a 72% success rate. Rakesh is ranked #38 out of 4571 analysts.

Out of the five analysts polled in the past three months, one rates Seagate stock a Buy, while four rate it a Hold. With a potential upside of nearly 9%, the stock’s consensus target price stands at $46.20.

 

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