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Seagate Technology Gets Upgrade to Buy from Hold at Stifel

Seagate Technology rises after an analyst at Stifel upgrades shares of the data storage company to buy from hold.

Seagate Technology (STX) - Get Free Report advanced Monday 1.6% to $57.89 after an analyst at Stifel upgraded the data storage company to buy from hold and boosted his price target to $70 from $62 a share.

Analyst Patrick Ho said the Dublin-based company's recent share weakness has created an opportunity to get more positive from both a fundamental and valuation perspective.

Seagate is scheduled to release second-quarter earnings results Tuesday after the market closes. Analysts are expecting the company to report earnings of $1.31 a share. Revenue is forecast to total $2.72 billion, up 0.2% from the year-earlier quarter.

Ho said that he believes Seagate's momentum continues in the near-term data center/hyperscale environment.

"Some of the momentum we began to see in CY-2H19 will carry into 2020 and this will benefit Seagate and the industry as a whole as new nearline capacity drives are added," Ho said.

Ho noted that Western Digital's (WDC) - Get Free Report recent earnings commentary was “another positive
indicator that this trend can lead to a growth year in HDD revenues” across the industry.

Western Digital on Friday reported adjusted earnings of 62 cents a share, topping the consensus estimate of 58 cents. Revenue was flat with a year earlier at $4.2 billion, matching analyst estimates.

Ho said there is likely to be a "more favorable turn in 2020 driven by an improved competitive positioning on the nearline capacity drive front.”

In November, Seagate Technology reported net income in its fiscal first quarter of $200 million, or 74 cents a share, down from $450 million, or $1.54 a share, a year earlier. Revenue was $2.58 billion, down from $2.99 billion.