Seagate Bull Flags 3 Key Things To Watch For At Next Week’s Analyst Event: Retail Mood Muted

Seagate Technology Holdings, Inc. (STX) could be on investors’ radar in the coming sessions as the data storage company prepares to host its analyst event on May 22. 

In a note released on Thursday, Morgan Stanley's Erik Woodring said expectations are high, going into the event. The analyst views the event as a positive catalyst for the stock.

The analyst's industry checks point to a still-healthy hard disk drive cycle. Therefore, he expects the company to paint a positive picture and issue an outlook for a high-single-digit to mid-single-digit long-term revenue compounded annual growth rate.

Woodring expects the company’s long-term gross margin guidance to match or exceed rival Western Digital’s (WDC) 38% guidance. That implies stronger like-for-like long-term HDD margins due to technology leadership.

According to the analyst, the three focus areas of the analyst event are:

• A second cloud service provider qualification for Heat-Assisted Magnetic Recording (HAMR) — a hard drive technology that increases storage capacity by using heat to assist in writing data
• Details on how HAMR capacity ramps
• A new three to five- model that could imply about $14 of peak earnings per share (EPS), suggesting a stock trading at just 7.5 times peak EPS

The analyst said he would wait for the analyst event before tinkering with the price target but raised his bull-case valuation from $135 to $154, factoring in upside potential stemming from $14 of peak EPS.

On Stocktwits, Seagate stock elicited ‘neutral’ sentiment (51/100) from retailers early Friday, with the message volume at ‘low’ levels.

Seagate stock traded up 0.34 % at $107.80 in Friday’s early premarket session, while it has gained over 25% year-to-date.

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