Seagate’s Strategic Initiatives and Growth Prospects Justify Buy Rating

Wamsi Mohan, an analyst from Bank of America Securities, reiterated the Buy rating on Seagate Tech (STX – Research Report). The associated price target was raised to $125.00.

Wamsi Mohan has given his Buy rating due to a combination of factors including Seagate’s robust mid-term targets and strategic initiatives. The company has outlined ambitious goals for revenue growth and margin expansion, with expectations of achieving a low-to-mid teens revenue CAGR and gross margins of 40% by fiscal year 2028. Additionally, Seagate’s focus on capital returns, with plans to return over 75% of free cash flow to shareholders, further supports the positive outlook.
Seagate’s recent announcements, such as the completion of major customer qualifications and the initiation of a substantial share repurchase program, also contribute to the Buy rating. The company’s advancements in HAMR technology and expected increase in areal density are anticipated to drive capacity growth without increasing the number of drives, showcasing management’s confidence in cost controls. These strategic moves, along with the potential for buybacks to enhance earnings per share, underpin the optimistic view on Seagate’s stock.

In another report released today, Citi also maintained a Buy rating on the stock with a $140.00 price target.