Evercore ISI analyst C.J. Muse downgraded Seagate to Underperform and cut its price target to $45 from $55 based on peaking margins and HDD secular headwinds. Muse said Seagate has already guided above seasonal for both Q3 and Q4 and sees limited upside from current levels. He also believes the market is complacent on NAND pricing, especially with demand elasticity driving increasing HDD cannibalization. The analyst expects increasing price competition and continued softness will result in headwinds towards year end and into 2019. Further, Muse sees downside risk following the excellent run in shares given flattish at best topline growth, lower gross margins, and worst than expected NAND pricing.

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Sees Q4 revenue $1.7B-$2.0B, consensus $1.85B

Reports Q3 revenue $1.66B, consensus $1.68B. "Seagate's March quarter revenue grew 6% and non-GAAP EPS more than doubled over the December quarter as we benefit from improving cloud demand, our strong operating discipline and price execution. This combination sets the foundation for a return to target margin performance as the markets recover," said Dave Mosley, CEO. "This constructive demand backdrop is well-timed as we prepare to ramp our Mozaic products, anchored by industry-leading HAMR technology. HAMR-based products offer compelling economic value for our customers and position Seagate to drive further financial performance gains, as well as capitalize on favorable long-term demand for mass capacity storage."