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Seagate (STX) & Catalog to Develop DNA-Based Storage Platform

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Seagate Technology Holdings plc (STX - Free Report) and Catalog Technologies Inc are teaming up to accelerate the development of automated and scalable DNA-based computation and storage platforms.

The partnership is aimed at utilizing Seagate's "lab on a chip" technology to minimize the amount of “chemistry” needed for DNA-based storage and computation. The Seagate platform will allow users to test small droplets of synthetic DNA by using smaller amounts of chemicals and require less energy,  added Catalog

The droplets will be processed through various reservoirs on the Seagate platform. Chemical reactions are created when DNA from multiple sources is combined to perform a variety of computer tasks, including process optimization, machine learning and search and analytics.

The research will provide prospects for the future generations of DNA-based storage and computation platforms in various form factors like desktop and Internet of Things-sized versions.

Seagate is well-positioned to gain from the robust demand for computing applications like advanced analytics, artificial intelligence and machine learning. Apart from developing DNA-based storage, Catalog has already invented ways to incorporate DNA into these computing applications, hence reducing complexity and costs of storage systems.

Per a report from The Insight Partners, the U.S. DNA digital data storage market is expected to grow from $21.40 million in 2021 to $711.92 million by 2028 at a CAGR of 65%. The industry is expected to benefit from the high storage density and durability of these DNA-based storage compared to silicon-based storage, added the report.

Seagate invests heavily in product development to tap the growing demand for mass capacity storage solutions. The increasing demand for thinner laptops and tablets over the past few years has created an ideal market for SSDs.

Recently, it launched Exos X 2U12, 2U24 and 5U84 that use an erasure coding method called ADAPT (Advanced Distributed Autonomic Protection Technology), which reduces data redundancy overhead and speeds up recovery time with fast system rebuilds.

Exos X system combines ADAPT with Seagate’s Autonomous Drive Regeneration, which automatically monitors and rebuilds the drives in place, reducing the need for a manual swap. As a result, it helps the data centers to reduce computer e-waste and administrative burden.

However, the company’s performance is affected by inflationary pressures, non-HDD component shortages and uncertainty prevailing over global economic conditions, particularly at legacy end markets.

The company recently slashed the outlook for the current quarter owing to the deteriorating macroeconomic environment, especially in some Asian markets. Seagate noted that current cautious spending patterns by customers, including global enterprises, OEMs and certain domestic cloud clients, will likely affect demand for mass capacity solutions in the near term.

The company now expects revenues to be $2.1 billion (+/- $100 million) against previous guidance revenues of $2.5 billion (+/- $150 million).

At present, Seagate carries a Zacks Rank #5 (Strong Sell). Shares have lost 24.3% compared with the industry’s decline of 61.3% in the past year.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Cadence Design Systems (CDNS - Free Report) , Badger Meter (BMI - Free Report) and Arista Networks (ANET - Free Report) . Arista Networks and Cadence Design Systems currently sport a Zacks Rank #1 (Strong Buy), whereas Badger Meter carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CDNS 2022 earnings is pegged at $4.11 per share, rising 5.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.

Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 9.8%. Shares of CDNS have jumped 3.6% in the past year.

The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 6% in the past 60 days.

Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 12.6%. Shares of BMI have lost 5.7% of their value in the past year.

The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $4.04 per share, increasing 9.8% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.

Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 37.1% in the past year.

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