Seagate Technology Holdings (NASDAQ:STX) is drawing bullish calls from analysts after strong quarterly results and an improving AI-driven demand outlook, with both Rosenblatt and BofA Securities raising their price targets.
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Rosenblatt: Sees Strong Earnings Momentum
Rosenblatt analyst Kevin Cassidy maintained a Buy rating and raised his price target to $1,000 from $500, basing it on a 30x multiple of his higher 2027 adjusted EPS estimate.
Cassidy said Seagate delivered a strong fiscal third quarter, with revenue of $3.11 billion rising 10.2% sequentially and 44.1% year-over-year, beating both his and consensus estimates.
He noted adjusted gross margin reached 47.0%, while EPS of $4.10 exceeded the high end of guidance.
He highlighted data center demand as the main growth driver, with revenue climbing 55% year-over-year to $2.5 billion, accounting for 80% of total revenue.
Nearline drives accounted for about 90% of shipments, and Mozaic drives shipped to 75% of the leading cloud customers.
Looking ahead, Cassidy expects June-quarter revenue of about $3.45 billion and EPS near $5.
He also raised projections to $12 billion in revenue and $14.8 EPS for fiscal 2026, and $16.8 billion and $27.1 EPS for fiscal 2027.
He added that nearline capacity is nearly fully allocated through 2027, with customers already planning 2028 supply, while HAMR technology should drive higher capacity, margins, and lower cost per bit, supporting revenue growth above 20%.
BofA: Highlights Demand, Pricing Power
BofA Securities analyst Wamsi Mohan reiterated a Buy rating and raised his price forecast to $840 from $700, pointing to improving demand and tight HDD supply.
Mohan said Seagate beat fiscal third-quarter expectations and guided fourth-quarter revenue and EPS above both BofA and Street estimates, supported by AI-driven demand.
He noted that dollars per terabyte increased 6% year-over-year and sequentially, while nearline capacity remains almost fully allocated through 2027.
He added that operating expenses remain well controlled and that the shift toward HAMR technology continues to drive cost reductions and margin expansion, with incremental gross margins expected to stay around 70%.
Mohan raised his forecasts to $12.1 billion in revenue and $14.94 EPS for fiscal 2026, up from $11.7 billion and $13.65, and maintained his valuation based on a 29x multiple of 2027 EPS of $29.28.
He also expects strong free cash flow generation to continue, with capital allocation initially focused on debt reduction before shifting toward share buybacks, while capex remains in the 4% to 6% range.
STX Price Action: Seagate Technology shares were up 11.67% at $646.35 at the time of publication on Wednesday. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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