On Wednesday, Baird analysts maintained a positive outlook on Seagate Technology (NASDAQ:STX) stock, reiterating an Outperform rating and a $120.00 price target. Currently trading at $101.25 with a market capitalization of $21.4 billion, Seagate has shown strong momentum with a 19.7% return over the past year.
According to InvestingPro data, analyst price targets range from $65 to $150, reflecting diverse market opinions on the stock's potential. Baird's analysis suggests that Seagate is set to benefit from increasing capital expenditures by hyperscalers, a sector that is expected to see further growth this year.
Seagate recently reported that their nearline Exabyte (EB) shipments have surpassed the peak of the fourth fiscal quarter of 2022, showing a significant year-over-year increase of 77%. This growth is indicative of a robust demand for data storage, driven by the expansion of artificial intelligence (AI) technologies. The company's revenue growth forecast for FY2025 stands at 41%, with current revenues at $7.3 billion.
InvestingPro analysis reveals that Seagate maintains a strong financial health score, suggesting solid operational performance. According to Seagate's management, a considerable portion of the data generated by AI is anticipated to be stored on hard disk drives (HDDs), which could lead to sustained growth for the company.
The report also highlights Seagate's Mosaic platform as a potential source of mix gain opportunities. The platform is expected to enhance the company's product offerings and contribute to its financial performance. Additionally, HDDs continue to be a cost-effective solution for data storage, offering over six times lower cost per terabyte compared to NAND flash storage.
Financially, Seagate is trading at its five-year average price-to-earnings (P/E) ratio based on Baird's 2025 earnings per share (EPS) estimate. The firm notes that Seagate's higher gross margin profile of 28.9% and the transition to its 2026 earnings could justify a multiple expansion.
Based on InvestingPro's Fair Value analysis, the stock appears slightly overvalued at current levels. The company has maintained dividend payments for 14 consecutive years, with a current yield of 2.84%.
The analysts' commentary underscores their confidence in Seagate's market position and its ability to capitalize on the growing demand for data storage solutions. For deeper insights into Seagate's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
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