Seagate Tech: Balancing Optimism and Caution with a Hold Rating Amid Growth Projections and Execution Risks

Wells Fargo analyst Aaron Rakers has maintained their neutral stance on STX stock, giving a Hold rating today.

Aaron Rakers has given his Hold rating due to a combination of factors that reflect both optimism and caution regarding Seagate Tech’s future performance. The company has outlined a promising revenue growth trajectory, with expectations of a low-to-mid teen percentage revenue CAGR from FY24 to FY28, and a significant increase in nearline capacity. However, there is a sense of conservatism in these projections, which could lead investors to question the top-line growth potential.
Additionally, while Seagate’s HAMR technology roadmap presents a positive outlook with plans to introduce high-capacity HDDs and increase market share, the complexity of this technology may be underappreciated, posing potential execution risks. The company’s decision to resume share repurchases is a positive signal, yet the overall financial framework, including debt levels and operating expenses, suggests a balanced approach to growth. These factors collectively contribute to the Hold rating, indicating a wait-and-see stance as the company navigates these opportunities and challenges.

In another report released today, Barclays also maintained a Hold rating on the stock with a $90.00 price target.

Based on the recent corporate insider activity of 94 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of STX in relation to earlier this year.