On Wednesday, TD Cowen maintained a positive outlook on Seagate Technology shares (NASDAQ:STX), reiterating a Buy rating and a price target of $110.00. The firm's analysis acknowledges the company's guidance as aligning with expectations, reinforcing the bullish stance on the demand for nearline HDDs.
The anticipation of gross margins reaching 31% by September was noted, alongside the potential for near-term concerns due to delays in Heat-Assisted Magnetic Recording (HAMR) technology. However, the long-term earnings potential attributed to HAMR technology for fiscal years 2026-2027 remains unchanged according to the firm.
The analyst's commentary highlighted that, despite potential short-term unease caused by the HAMR delays, the technology's contribution to Seagate's earnings in the coming years is still intact. The firm's perspective suggests that the delays do not alter the overall positive forecast for the company's financial performance.
Additionally, it was noted that Seagate has successfully qualified its HAMR technology with a non-cloud customer, speculated to be Dropbox (NASDAQ:DBX), which could be viewed as a positive development for the company's technology adoption and market penetration.
The price target of $110.00 is based on approximately 12 times the expected earnings per share (EPS) of $9 for the calendar year 2026. This valuation reflects the firm's confidence in Seagate's future profitability and the anticipated growth in earnings driven by the demand for its products and technological advancements.
Seagate Technology, a prominent player in data storage solutions, is navigating the competitive landscape with its nearline HDD products and the development of HAMR technology. The latter is expected to enhance the company's product offerings and support its financial growth in the forthcoming years.
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