Seagate Know-how Inventory Slides After Earnings. What Wall Road Is Saying.

Textual content measurement

Seagate

inventory is taking it on the chin on Friday, regardless of what gave the impression to be a strong December quarter earnings report.

Seagate shares have been down 6.3% to $58.96 in current buying and selling, whereas shares of rival

Western Digital

are off 5.8%, to $50.40.

As reported on Thursday,

Seagate Technology

(ticker: STX) posted fiscal-second-quarter revenue of $2.62 billion, down from $2.7 billion a yr in the past, however above the corporate’s forecast of $2.55 billion, with non-GAAP income of $1.29 a share, above steering at $1.10 a share.

For the March quarter, the disk-drive maker sees income of $2.65 billion and non-GAAP income of $1.30 a share, somewhat forward of the earlier Road consensus forecast of $2.63 billion and $1.26 a share.

A lot of the Wall Road protection of the quarter was upbeat. Greater than a half-dozen analysts raised goal costs on the inventory, and a few of the protection was down proper glowing.

“We consider that offer within the HDD [hard disk driver] market is tightening and legacy headwinds are declining,” Northland Capital analyst Gus Richard writes. “Given the market is successfully a duopoly [with Western Digital], we might count on extra rational additions to produce and higher pricing.”

However the selloff suggests there are market issues.

UBS analyst Munjal Shah, who has a Impartial score on Seagate shares, really trimmed his value goal to $63 from $65. “The quarter was sturdy (considerably anticipated) pushed by restoration within the enterprise market, wholesome cloud demand, and higher than anticipated surveillance demand,” he writes. However he provides that the danger of a near-term peak is growing.

Mizuho analyst Vijay Rakesh likewise retains his Impartial score and his $65 goal. He thinks the corporate may face a probably softer second half within the June 2021 fiscal yr on weaker PC and cloud shipments.

Citi analyst Jim Suva retains his Impartial score on Seagate shares, too. Suva says that the earnings and gross sales beat was extensively anticipated given current energy in PC and cloud demand, pushed by the work-from-home development. And he notes that the outlook was reasonably stronger than consensus.

However he provides that “given the sturdy pricing and demand surroundings for HDDs we count on buyers have been hoping for a stronger outlook and EPS flow-through, however we additionally understand that COVID complexities nonetheless exist.”

Write to Eric J. Savitz at eric.savitz@barrons.com