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.
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Seagate Technology (STX) - Get 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 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.