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Seagate Shares Rise on Stronger-Than-Expected Earnings

Seagate Technology shares rose after the disk-drive maker reported stronger-than-expected earnings and buoyant guidance.
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Seagate Technology  (STX) - Get Seagate Technology PLC Report shares rose Friday after the disk-drive maker reported stronger-than-expected earnings for the latest quarter and buoyant guidance for the current quarter.

Chief Executive Dave Mosley cited “ongoing demand from cloud data-center customers and strength in the video and image applications markets.”

The stock recently was at $85.86, up 4.4%, and has traded on Friday up as much as 8.2% at $88.97. The stock has jumped 41% year to date.

In the fiscal 2022 first quarter ended Oct. 1, net income more than doubled to $526 million, or $2.28 a share, from $223 million, or 86 cents a share, in the year-earlier quarter.

Adjusted profit hit $2.35 a share, up from 93 cents a year earlier and above the consensus estimate of $2.21 a share derived from a FactSet survey of analysts.

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Seagate posted revenue of $3.12 billion, up 35% from $2.31 billion a year earlier. The FactSet analyst consensus called for $3.11 billion in the latest quarter.

For the current quarter it sees adjusted earnings of $2.20 to $2.50 a share in the quarter, compared with analysts’ prediction of $2.13.

Seagate anticipates revenue of $2.95 billion to $3.25 billion in the current quarter, compared with analysts’ projection of $3 billion.

Morningstar analyst William Kerwin raised his fair-value estimate for the stock to $75 from $70, after the company’s previous earnings report in July. He assigned it no moat.

Kerwin pointed to “stronger 2022 assumptions” in July. Further, “we maintain our expectation for high mass capacity demand to continue over the long term and think that a tight supply environment in fiscal 2022 will keep pricing erosion at bay and boost margins in the short term,” he said.