Seagate faces mixed reactions following positive earnings

Seagate Technology (NASDAQ:STX) received mixed reactions from market analysts following a first quarter fiscal 2025 earnings report that appeared to show the HDD recovery is well underway.

Seagate was down 4% during early trading on Wednesday. Other data storage manufacturers followed suit, with Western Digital (NASDAQ:WDC) slipping 2% and Micron Technology (NASDAQ:MU) edging lower by less than 1%.

“Despite management’s execution, the market dynamics are limiting the earnings power to less than $6, which combined with the current valuation keeps Susquehanna’s Negative rating unchanged,” said Susquehanna analyst Mehdi Hosseini, in an investor note.

Susquehanna also maintained its paltry $65 price target on Seagate.

However, other investment firms came away impressed with Seagate’s execution.

Rosenblatt Securities increased its price target to $140 from $125 and maintained its Buy rating on Seagate.

“Seagate delivered a beat-n-raise earnings report driven by robust Nearline drive demand from Cloud customers,” said Rosenblatt analyst Kevin Cassidy. “Adding to this was a demand uptick in Enterprise/OEM customers.”

Rosenblatt expects Seagate to continue improving its performance due to artificial intelligence demand driving the need for more data storage.

Morgan Stanley also reiterated its Overweight rating on the stock and its $133 price target.

“Seagate delivered the beat and raise we expected, with strong September quarter performance and December quarter guidance largely in-line with our above-Consensus forecasts,” said Morgan Stanley analysts, led by Erik Woodring, in an investor note on Wednesday.

Morgan Stanley expects HDD capacity shipped, gross margins and earnings per share will continue to grow throughout fiscal 2025 for Seagate.

“STX shipped 128EB of total HDD capacity, and 109EB of nearline HDD capacity in the September quarter, 9-14% ahead of our expectations, as cloud demand remained robust and enterprise OEM demand upticked for the first time in several quarters,” Woodring added.

“We see the potential for significant revenue growth for fiscal 2025, inclusive of the seasonal demand fluctuation that is typical for the March quarter,” said Seagate CEO Dave Mosley, during an earnings call on Tuesday evening.

“Cloud demand for our nearline drives remains robust, and we believe customers are managing their inventory levels well,” he added. “In the September quarter, revenue growth was driven by U.S. cloud providers, though we continue to see positive demand trends globally.”

Meanwhile, Seeking Alpha contributor Tom Lloyd noted yesterday morning that Seagate was on his “Model Portfolio List” and he recommended buying on any post-earnings pullback.

Western Digital is the next data storage company set to reveal its financial results. It will post its results post-market on Thursday, with a consensus of analysts calling for adjusted earnings per share of $1.71 on revenue of $4.12B.

Micron’s next quarterly report isn’t up until mid-December.