On Wednesday, Rosenblatt Securities adjusted its outlook on Seagate Technology (NASDAQ:STX), increasing the shares target to $125 from $115, while maintaining a Buy rating.
The firm's decision follows Seagate's reported demand surge from Cloud Service Providers (CSPs) and the Video & Imaging Application sector, which exceeded expectations. The company's build-to-order strategy contributed to more efficient manufacturing utilization and higher product prices.
Seagate Technology saw Non-GAAP gross margins expand significantly, reaching 30.9%, up from 26.1% in the previous quarter and 19.5% in the same period last year. Rosenblatt attributed this margin growth to the company's strategic manufacturing adjustments during a recent downturn.
These adjustments have enabled Seagate to achieve over 30% gross margins even with a revenue that is one-third lower than before, indicating a strong potential for earnings leverage.
The firm has revised its estimates for Seagate upward, reflecting the positive impact of the company's operational strategies. Rosenblatt's endorsement of the stock is based on Seagate's leadership in Hard Disk Drive (HDD) technology, its operational expertise, and a capital allocation policy that is favorable to investors. The analyst's comments underscore the company's ability to adapt and thrive amid changing market conditions.
Seagate's recent performance and Rosenblatt's updated price target suggest confidence in the company's future. The increase in the target price reflects the firm's belief in Seagate's continued leadership in the technology sector and its ability to maintain high gross margins and earnings potential. Investors may find the analyst's continued recommendation of the stock noteworthy as they evaluate the company's prospects in the technology industry.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.