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Seagate Stock Rises as UBS Upgrades to Buy

The hard disk drive business reaches a structural inflection, yielding more stable supply/demand dynamics, UBS said.

Seagate Technology  (STX) - Get Seagate Technology PLC Report shares rose Monday, after UBS upgraded the data storage company to buy from neutral, seeing benefits for the company from structural changes in the hard disk sector.

Seagate traded at $91.07, up 0.8% at last check, and has climbed 27% in the last six months. UBS lifted its price target to $105 from $83

“We see the hard disk drive business at a structural inflection, yielding more stable supply/demand dynamics and expanding cross cycle margins,” UBS analyst Timothy Arcuri wrote in a commentary, according to a Bloomberg report.

Near-term market trends also support the stock, he said.

Meanwhile, UBS trimmed its price target on Western Digital  (WDC) - Get Western Digital Corporation Report to $66 from $72, keeping its neutral rating. Both the cyclical and structural environment warrant caution for Western, the bank said, according to Bloomberg.

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Western Digital on Monday traded at $61.84, down 2% at last check, and has slid 6% over the past six months amid the semiconductor shortage.

Investors weren't too impressed with Seagate's latest quarterly results that were issued last month.

The Dublin-based company reported earnings of $2 a share on revenue of $3.01 billion in the latest quarter. Analysts were expecting earnings of $1.87 per share on revenue of $2.97 billion.

"Seagate’s industry-leading product portfolio for mass data infrastructure places the company in an outstanding position to capitalize on robust demand trends, generate solid and increasing free cash flow and achieve our long-term financial objectives," said CEO Dave Mosley.

But Seagate stock fell after the earnings release. In the prior week, Mizuho expressed bearishness on the chip sector, urging investors to "be more defense and selective."