Loop Capital analyst Ananda Baruah kept his Buy rating and $60 price target on Seagate after its Q2 earnings beat and Q3 outlook, saying the below-consensus guidance is a "temporary" effort to "control channel inventory in preparation for improving fundamentals." The analyst notes that hyperscale capacity shipments have bottomed and should be flat sequentially in the coming quarter. Baruah adds that his price target implies a forward earnings multiple of 11-times, while investors typically pay 10- to 14-times for rates of growth, operating margin, and free cash flows of Seagate.

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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."