Seagate Tech (STX) has received a new Buy rating, initiated by Morgan Stanley analyst, Erik Woodring.
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Erik Woodring has given his Buy rating due to a combination of factors that highlight Seagate Technology’s strong potential for growth and value. The company’s management has presented a long-term financial model that exceeded expectations, indicating stronger revenue growth, improved operating margins, and an accelerated share buyback plan. These factors suggest a peak earnings per share (EPS) of $19 by fiscal year 2028, which is significantly higher than previous estimates.
Despite Seagate’s stock already outperforming this year, it is still trading at a low multiple of its peak earnings, making it an attractive investment opportunity. The company’s leadership in technology, premium margins, and robust free cash flow generation support the potential for EPS growth and a re-rating of its stock value. The new price target of $140 reflects a 14 times next twelve months EPS, indicating substantial upside potential, while the bull case valuation suggests even greater returns. However, potential risks such as changes in the HDD market cycle, tariffs, and disruptions from eSSD technology are noted as considerations.