Deutsche Bank Upgrades Seagate (STX) to Buy; Sanmina (SANM) Cut to Sell, Flextronics (FLEX) & Fabrinet (FN) Cut to Hold

May 23, 2013 7:46 AM EDT
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Price: $36.59 +0.69%

Rating Summary:
    8 Buy, 26 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 29 | Down: 30 | New: 23
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Deutsche Bank today put out a note discussing companies in the technology supply chain. Overall, analyst Sherri Scribner said she is positive on HDD names and cautions on EMS stocks. Stocks with ratings changes include Seagate Technology (Nasdaq: STX), Sanmina Corporation (Nasdaq: SANM), Flextronics International Ltd. (Nasdaq: FLEX) and Fabrinet (NYSE: FN).

“HDD names Seagate and Western Digital (Nasaq: WDC) have also outperformed the overall markets. We believe this is primarily due to appreciation of the shares over the past two years due to the impact of the Thailand floods, which reset pricing and profitability higher, as well as the consolidation of the industry. We expect the benefits of more moderate prices, coupled with the discipline enabled by consolidation to continue for the industry and expect Seagate and Western Digital to continue to outperform the overall market. As a result, we are raising our price targets on Seagate and Western Digital, and raising our rating on Seagate to a Buy from Hold," said Scribner

Scribner said EMS stocks performance has largely been disappointing, and she views these stocks largely as trading vehicles.

"From a stock perspective, we are more cautious on Fabrinet, as we see continued struggles in the optical market as unlikely to be resolved in the near term, and we are downgrading Fabrinet to a Hold from a Buy. We are also downgrading Flextronics to a Hold from a Buy after the stock’s strong year-to date performance. Finally, we believe the recent outperformance of Sanmina's shares is unwarranted, and we remain concerned about the company's lack of revenue growth," she said.

For an analyst ratings summary and ratings history on Seagate Technology click here. For more ratings news on Seagate Technology click here.

Shares of Seagate Technology closed at $42.17 yesterday.

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