4 Analyst Takeaways Of Seagate Technology's Q1 Earnings

Seagate Technology Holdings PLC STX reported its quarterly revenue at $2.6 billion, down 13% year-on-year, and non-GAAP profits at $1.59 per share, with both metrics below Street expectations. The company’s projection was $1.90 a share.

Rosenblatt Securities On Seagate Technology

Analyst Kevin Cassidy maintained a Buy rating, while lowering the price target from $100 to $95.

“Seagate reported a miss to June quarter estimates and guided revenue down 5% and non-GAAP EPS down 12%,” Cassidy said in a note. “Weakness coming as expected from COVID lockdowns, lower consumer demand and non-HDD component shortages,” he added.

“In our view, the secular demand for mass capacity storage remains in place. We believe Seagate has a strong product strategy for steadily increasing HDD densities over the next several years,” the analyst further mentioned.

Mizuho Securities On Seagate Technology

Analyst Vijay Rakesh reiterated a Neutral rating, while reducing the price target from $95 to $83.

“While STX noted expectations for a DecQ rebound into 1H23 with stable nearline demand, we believe potential elevated risks to US datacenter spending could be a headwind,” analyst Rakesh said in a note.

“We believe investor concerns into 2H22/1H23 revolve around weaker PC and nearline, with slowdown in hyperscale cloud spending after two years of strong growth and competition,” he added.

The analyst reduced the earnings estimates for the ongoing quarter and fiscal 2023 from $2.13 per share to $1.40 per share and from $8.48 per share to $5.82 per share, respectively.

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Benchmark On Seagate Technology

Analyst Mark Miller maintained a Buy rating and a price target of $85 on Seagate Technology.

“During the June quarter, the firm faced headwinds due to the Covid situation in China, server supply constraints at cloud customers and higher costs for raw materials and non-HDD components,” analyst Miller said in a note.

While China is expected to recover soon from the Covid lockdowns, consumers outside the Asian country have been “upbeat on their capital spending plans,” Miller mentioned. “A rebound is expected after the September quarter resulting in some growth in FY23,” he added.

Wells Fargo On Seagate Technology

Analyst Aaron Rakers reiterated an Equal Weight rating, while keeping the price target unchanged at $85.

Although Seagate Technology’s shares are likely to pare recent gains, investor sentiment already reflects “an expected negative forward est. reset,” Rakers said in a note.

“We had recently reduced our F1Q23 est. to $2.65B / $1.73; however, this remained well below the tempering Street est. at $3.00B / $2.22. This leaves us to consider / question whether Seagate's guide could be viewed as a positive reset amid increasing macro-driven demand concerns; however, we think investors will likely still struggle w/ an expectation of flat to slightly positive y/y rev. growth in F2023 at this point,” the analyst further wrote.

STX Price Action: Shares of Seagate Technology had declined by 8.34% to $76.64 at the time of publication Friday.