The “biggest surprise” in Seagate Technology Holdings PLC‘s (NASDAQ:STX) first quarter was that the company grew its storage capacity without massive capital spend, according to TD Cowen analyst Krish Sankar.
The company’s shares rose in early trading on Wednesday just as Seagate analyst reports circulated:
- Sankar maintained a Buy rating, but slashed the price target from $1,000 to $900.
- Wedbush analyst Matt Bryson reiterated an Outperform rating and price target of $1,000.
- Cantor Fitzgerald analyst C.J. Muse reaffirmed an Overweight rating and price target of $1,000.
- Rosenblatt Securities analyst Sajal Dogra reiterated a Buy rating and a $1,000 price target.
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TD Cowen: Sankar says Seagate’s transition to its new technology, heat-assisted magnetic recording (HAMR), could drive more than 30% exabytes in 2027.
This “gives us some relief that there won’t be a capacity war” with Western Digital Corp (NASDAQ:WDC), the analyst wrote. He added that the catalysts ahead could be:
- Above 20% growth in average selling prices (ASPs) in 2027
- NAND strength extending into the second half of 2027
Wedbush: While Seagate reported solid first-quarter results, its second-quarter guidance continued to reflect “steady progress” in sales, margins, earnings, and cash flows. Despite this, he added that both results and guidance fell short of high expectations.
Management’s guidance implies 220 basis points (bps) of growth in the fiscal second quarter, a “steep slowdown” from the first quarter’s 510bps growth and the 570bps growth reported in the fourth quarter of fiscal 2026, the analyst said.
Cantor Fitzgerald: Seagate delivered a strong beat-and-raise quarter, Muse said. However, the deceleration in exabytes (total data storage space shipped to customers) into the September quarter likely disappointed investors, he added.
The good news is that Mozaic 4 is ramping and management has guided to a re-acceleration in exabytes into the December quarter, the analyst stated. The company’s gross margins may improve sequentially in calendar year 2027, driven by a significant increase in ASPs, with management citing “value-based pricing,” he added.
Rosenblatt Securities: Seagate reported strong results with price hikes and incremental gross margins above 85%, Dogra said. This was achieved despite “higher external component costs,” which drove cost per terabyte higher for the first time since mid-2023, he added.
“Internal head and media cost reductions remain on track, and we expect double-digit cost/TB declines to resume,” the analysts further wrote.
STX Price Action: Seagate Technology shares rose 1.34% to $676.81 at the time of publication on Wednesday.
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