Seagate Hits 52-Week High On Positive Preliminary Q2 Results

Shares of Seagate Technology PLC (NASDAQ:STX) rallied to a new 52-week high of $52.77, eventually closing a tad lower at $52.62 on Jan 19.

The stock gained from the positive second-quarter fiscal 2018 preliminary results. Shares of Seagate have rallied 14.4% since the announcement on Jan 8.

Seagate now expects revenues to be approximately $2.9 billion compared with an increase of 3-5% guided previously. The improvement can primarily be attributed to strong growth in exabyte demand.

Moreover, the company recently announced a long-term supply agreement with Toshiba, which ensures continuous supply of NAND chips for Seagate’s expanding solid-state drive (SSD) portfolio.

Additionally, hints of PC market stabilization as reflected in the latest reports from Gartner and IDC are a positive.

Seagate has returned 44.7% in the past year, outperforming the industry’s rally of 35.4%. The company carries a Zacks Rank #2 (Buy) and has a market capital of $12.13 billion.

Improving HDD Demand

HDD (hard disk drives) is improving primarily due to strong demand for high-capacity mass-storage solutions. Increasing adoption of Seagate’s Nearline HDDs are expected to boost its market share in the near term.

Further, Seagate’s effort to improve areal density with the ramp up of its heat assisted magnetic recording (HAMR) technology is a key catalyst.

Moreover, stabilization of the PC market per the latest report from Gartner and IDC bodes well for memory shipments, particularly HDDs. According to IDC, worldwide PC shipment has shown signs of growth in the fourth quarter of 2017, during which shipments touched 70.6 million units, up 0.7% year over year.

Seagate also expects its exabyte shipments to be around 88 exabytes, which reflects drive shipments to be around 40 million and average capacity per drive to be approximately 2.2 terabytes.
Rising Estimates

The Zacks Consensus Estimate for fiscal 2018 earnings has increased 8.4% to $4.52 over the last 30 days. The figure reflects growth of 9.7% from the year-ago actual figure. The Zacks Consensus Estimate for fiscal 2018 sales is currently pegged at $10.50 billion.

The consensus estimate for fiscal 2019 earnings has increased 2.7% to $4.56 over the same time frame. The figure reflects growth of almost 1% from the year-ago actual figure. Fiscal 2019 sales are pegged at $10.35 billion.

Other Stocks to Consider

Analog Devices (NASDAQ:ADI) , The Trade Desk (NASDAQ:TTD) and Micron Technology (NASDAQ:MU) are some other stocks worth considering in the broader technology sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Analog Devices, The Trade Desk and Micron Technology is estimated to be 10.40%, 25% and 10%, respectively.

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