NEW YORK (TheStreet) -- Shares of Seagate Technology  (STX - Get Report)  were retreating 7.64% to $35.08 in late Tuesday afternoon trading after the data storage company pre-announced its 2017 first-quarter financial results and said operating expenses are expected to increase quarter-over-quarter to $470 million. 

The Cupertino, CA-based company also lifted its revenue outlook to $2.8 billion, up from $2.7 billion. 

Citigroup analysts said the increased operating expenses are just a "blemish" on the company's efforts to lower its cost base, according to Barron's

Seagate's higher revenue and gross profits should offset the operating expenses, the firm noted. 

Additionally, Needham & Co. lifted Seagate's stock rating to "strong buy" from "buy." 

The firm also raised its price target to $43 from $39, noting that the company is benefiting from a "generally stable to improving demand environment," Barron's reports. 

"Bigger picture, what most investors may not see immediately impacting the results is a fundamental change in engagement process with cloud service provider customers for STX," Needham said in an analyst note. 

Over time, Seagate's factory loading and linearity should improve, mitigating some of the muted buying behavior in the category, the firm added. 

More than 11.86 million of Seagate's shares have changed hands so far today vs. its average volume of 4.56 million shares per day.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

The team rates Seagate as a Hold with a ratings score of C. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, the team also finds weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.

You can view the full analysis from the report here: STX

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