Will Seagate Technology (STX) Stock Be Helped By This Price Target Increase?

NEW YORK (TheStreet) -- Seagate Technology (STX) shares had their "overweight" rating reiterated by analysts at Morgan Stanley (MS) , who also raised the company's price target to $66 from $65.

The firm noted the company's own revised 2015 revenue guidance as a reason for the upgraded outlook.

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"The company expects to achieve a $1B revenue run rate from its cloud systems and solutions business (formed from Xyratex, EVault, and LSI's flash business) in 5-6 quarters compared to FY15 guidance of $650-$700M. By 2017, STX targets total flash + cloud revenue of $2B," said analysts.

Despite this positive note Seagate Technology shares are down 2.7% to $58.38 today.

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, notable return on equity, good cash flow from operations and growth in earnings per share. 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:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 49.96% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • Net operating cash flow has increased to $577.00 million or 48.71% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 35.63%.
  • SEAGATE TECHNOLOGY PLC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEAGATE TECHNOLOGY PLC reported lower earnings of $4.52 versus $4.79 in the prior year. This year, the market expects an improvement in earnings ($5.40 versus $4.52).
  • STX, with its decline in revenue, underperformed when compared the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: STX Ratings Report

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