Stifel analyst Patrick Ho raised the firm's price target on Seagate to $86 ahead of the company's analyst day this Wednesday. The analyst believes the event will highlight Seagate's long-term opportunities and sees it as a positive catalyst for the shares. Last week, Bank of America analyst Wamsi Mohan double upgraded the stock to Buy on "strong" revenue and earnings growth, and said he expects its analyst day to signal "a bullish outlook."
EVENT SHOULD BE POSITIVE CATALYST: Stifel analyst Patrick Ho raised the firm's price target on Seagate to $86 from $75 and keeps a Buy rating on the shares ahead of the company hosting a virtual analyst day this Wednesday, telling investors that he thinks the event should highlight Seagate's long-term opportunities and be a positive catalyst for the shares.
The analyst expects three takeaways from the event. First, he believes IT 3.0 and 4.0 are accelerating and this dynamic hastens the need for low-cost, high quality storage solutions. Secondly, management will likely provide more details on its HAMR-based technology that could further expand its share lead, as well as other new products for emerging markets, Ho contended. Finally, the analyst expects an updated long-term target model, where he would not be surprised to see gross margins in the 30%-plus and operating margins in the 18%-22% range.
BUY SEAGATE: Last week, Bank of America analyst Wamsi Mohan upgraded Seagate to Buy from Underperform with a $90 price target. The analyst told investors he expects "strong" revenue and earnings growth for Seagate over the next few years, "well above consensus," and more disciplined capital spending to drive better pricing. Mohan also forecasts a higher mix of high-capacity drives leading to higher margins, and believes COVID-related expenses that are currently depressing margins should also lessen over time. Additionally, he expects the company's upcoming analyst day on February 24 to signal a "bullish outlook."
PRICE ACTION: In afternoon trading, shares of Seagate have gained more than 1% to $74.03.
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