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Seagate (STX) Up 39% in the Past Year: Will the Rally Last?
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Seagate Technology Holdings plc (STX - Free Report) is witnessing strong momentum, with shares having rallied 39.4% in the past year compared with the S&P 500 Composite’s 28.6% growth.
At present, the stock carries a Zacks Rank #2 (Buy). Apart from a favorable rank, STX has a Momentum Score of A. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Momentum Score of A or B offer solid investment opportunities.
The stock is down 14.5% from its 52-week high level of $101.26, making it relatively affordable for investors.
STX’s fiscal 2024 revenues are anticipated to decline 13.3% owing to near-term headwinds but are expected to jump 34.7% in fiscal 2025.
Image Source: Zacks Investment Research
The company’s earnings per share (EPS) are expected to climb 126% and 951% from the year-ago levels to 43 cents and $4.52 in fiscal 2024 and 2025, respectively.
The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has increased 59.3% and 6.9%, respectively, in the past 60 days, reflecting analysts’ optimism.
Growth Factors
Headquartered at Dublin, Ireland, Seagate is leading provider of data storage technology and infrastructure solutions. The company’s primary product offerings are hard disk drives which are commonly referred to as disk drives, hard drives or HDDs.
STX also develops other electronic data storage products such as SSD (solid state drive) and storage subsystems. Also, it offers storage solutions like a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud.
The company’s performance is driven by mass capacity demand improvement due to higher nearline cloud demand.
Nearline cloud revenues improved owing to higher sales to cloud customers across United States and stabilized enterprise demand. Improving demand for SSD products is driving the non-HDD segment’s revenue growth.
In the last reported quarter, non-GAAP revenues of $1.555 billion improved 7% sequentially and remained within management’s guidance of $1.55 billion (+/- $150 million).
Management expects secular trends and innovations in driving up aerial density to benefit mass capacity storage.
STX also noted that the launch of Mozaic 3+ hard drive platform earlier in the year, which features Heat-Assisted Magnetic Recording technology, positioned it well to capture share in the mass capacity storage solutions market.
Seagate has begun shipping initial volumes of 24TB CMR / 28TB SMR drives in December 2023. It is on track to begin volume ramp for HAMR 3+TB per disk platform (currently in qualification with initial launch partner) in the March quarter, with a target to ship about 1 million units in the first half of 2024.
Management anticipates concluding qualifications with a majority of domestic hyperscalers clients and a couple of global cloud customers during 2024. Seagate is planning to launch HAMR 4+TB per disk in second half of 2025.
For fiscal third quarter, management expects incremental improvements in mass capacity demand from cloud and enterprise clients to more than offset seasonal downtick in demand in both the VIA and legacy markets.
STX anticipates third-quarter fiscal 2024 revenues to be $1.65 billion (+/- $150 million). Non-GAAP loss for the fiscal third quarter is expected to be 25 cents per share (+/- 20 cents).
A Few Headwinds
Weakness in global macroeconomic conditions, especially a relatively sluggish recovery in China, remains a major concern. IT budget spending is expected to remain somewhat muted amid volatile macro backdrop.
VIA market is anticipated to reflect seasonal patterns in 2024, with the March quarter being the low point, noted management.
Revenues from the legacy market are forecast to decline in the current quarter on a sequential basis owing to lower consumer demand in the after-holiday season.
Other Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Manhattan Associates (MANH - Free Report) , Cadence Design Systems (CDNS - Free Report) and Microsoft (MSFT - Free Report) . While Manhattan Associates and Cadence sport a Zacks Rank #1 (Strong Buy) each, Microsoft carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MANH’s 2024 EPS has increased 3.6% in the past 60 days to $3.76. Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 68.1% in the past year.
The Zacks Consensus Estimate for Cadence’s 2024 EPS has increased 3% in the past 60 days to $5.93. CDNS’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 3.4%. The long-term earnings growth rate is 17.1%. Shares of CDNS have soared 50% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS is pegged at $11.63, indicating growth of 18.6% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term earnings growth rate is 16.2%. Shares of MSFT have rallied 53.9% in the past year.
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Seagate (STX) Up 39% in the Past Year: Will the Rally Last?
Seagate Technology Holdings plc (STX - Free Report) is witnessing strong momentum, with shares having rallied 39.4% in the past year compared with the S&P 500 Composite’s 28.6% growth.
At present, the stock carries a Zacks Rank #2 (Buy). Apart from a favorable rank, STX has a Momentum Score of A. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Momentum Score of A or B offer solid investment opportunities.
The stock is down 14.5% from its 52-week high level of $101.26, making it relatively affordable for investors.
STX’s fiscal 2024 revenues are anticipated to decline 13.3% owing to near-term headwinds but are expected to jump 34.7% in fiscal 2025.
Image Source: Zacks Investment Research
The company’s earnings per share (EPS) are expected to climb 126% and 951% from the year-ago levels to 43 cents and $4.52 in fiscal 2024 and 2025, respectively.
The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has increased 59.3% and 6.9%, respectively, in the past 60 days, reflecting analysts’ optimism.
Growth Factors
Headquartered at Dublin, Ireland, Seagate is leading provider of data storage technology and infrastructure solutions. The company’s primary product offerings are hard disk drives which are commonly referred to as disk drives, hard drives or HDDs.
STX also develops other electronic data storage products such as SSD (solid state drive) and storage subsystems. Also, it offers storage solutions like a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud.
The company’s performance is driven by mass capacity demand improvement due to higher nearline cloud demand.
Nearline cloud revenues improved owing to higher sales to cloud customers across United States and stabilized enterprise demand. Improving demand for SSD products is driving the non-HDD segment’s revenue growth.
In the last reported quarter, non-GAAP revenues of $1.555 billion improved 7% sequentially and remained within management’s guidance of $1.55 billion (+/- $150 million).
Management expects secular trends and innovations in driving up aerial density to benefit mass capacity storage.
STX also noted that the launch of Mozaic 3+ hard drive platform earlier in the year, which features Heat-Assisted Magnetic Recording technology, positioned it well to capture share in the mass capacity storage solutions market.
Seagate has begun shipping initial volumes of 24TB CMR / 28TB SMR drives in December 2023. It is on track to begin volume ramp for HAMR 3+TB per disk platform (currently in qualification with initial launch partner) in the March quarter, with a target to ship about 1 million units in the first half of 2024.
Management anticipates concluding qualifications with a majority of domestic hyperscalers clients and a couple of global cloud customers during 2024. Seagate is planning to launch HAMR 4+TB per disk in second half of 2025.
For fiscal third quarter, management expects incremental improvements in mass capacity demand from cloud and enterprise clients to more than offset seasonal downtick in demand in both the VIA and legacy markets.
STX anticipates third-quarter fiscal 2024 revenues to be $1.65 billion (+/- $150 million). Non-GAAP loss for the fiscal third quarter is expected to be 25 cents per share (+/- 20 cents).
A Few Headwinds
Weakness in global macroeconomic conditions, especially a relatively sluggish recovery in China, remains a major concern. IT budget spending is expected to remain somewhat muted amid volatile macro backdrop.
VIA market is anticipated to reflect seasonal patterns in 2024, with the March quarter being the low point, noted management.
Revenues from the legacy market are forecast to decline in the current quarter on a sequential basis owing to lower consumer demand in the after-holiday season.
Other Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Manhattan Associates (MANH - Free Report) , Cadence Design Systems (CDNS - Free Report) and Microsoft (MSFT - Free Report) . While Manhattan Associates and Cadence sport a Zacks Rank #1 (Strong Buy) each, Microsoft carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MANH’s 2024 EPS has increased 3.6% in the past 60 days to $3.76. Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 68.1% in the past year.
The Zacks Consensus Estimate for Cadence’s 2024 EPS has increased 3% in the past 60 days to $5.93. CDNS’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 3.4%. The long-term earnings growth rate is 17.1%. Shares of CDNS have soared 50% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS is pegged at $11.63, indicating growth of 18.6% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term earnings growth rate is 16.2%. Shares of MSFT have rallied 53.9% in the past year.