Will This Upgrade Help Seagate Technology (STX) Today? (Update)

Update (9:35 a.m.): Updated with Friday market open information.

NEW YORK (TheStreet) -- RBC Capital upgraded Seagate Technology  (STX) to "outperform" from "sector perform." The firm noted the industry should benefit from stable pricing and enterprise growth.

The stock was rising 2.4% to $51.24 shortly after the market opened on Friday.

Must Read: Analysts' Actions: GRPN JWN SIG STX WFM

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Separately, TheStreet Ratings team rates SEAGATE TECHNOLOGY PLC as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate SEAGATE TECHNOLOGY PLC (STX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, STX's share price has jumped by 41.67%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, STX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has slightly increased to $856.00 million or 1.42% when compared to the same quarter last year. In addition, SEAGATE TECHNOLOGY PLC has also modestly surpassed the industry average cash flow growth rate of -4.13%.
  • SEAGATE TECHNOLOGY PLC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SEAGATE TECHNOLOGY PLC reported lower earnings of $4.79 versus $6.45 in the prior year. This year, the market expects an improvement in earnings ($5.12 versus $4.79).
  • STX, with its decline in revenue, slightly underperformed the industry average of 4.7%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, SEAGATE TECHNOLOGY PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: STX Ratings Report

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