RBC Capital Raises Price Target on Seagate Technology (STX) to $34; Reiterates Sector Perform
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RBC Capital reiterated a Sector Perform rating on Seagate Technology (NASDAQ: STX), and raised the price target to $34.00 (from $31.00), after meeting with investors and management. STX stressed their focus is to go after high margin HDD units vs. chase low-end of the markets where the profit pool is less attractive.
Analyst Amit Daryanani commented, "1) STX is focused on going after higher margin HDD units vs. chasing the lower end of the market (PCs) where the profit pool is presently less attractive; 2) From an opex standpoint, STX plans to manage costs in-line with demand and notes that cost cuts are still ongoing; 3) STX expects PC TAM for HDDs and PC demand trends in general to be downward trending; 4) CSP demand was strong in June-qtr and expect LT EB growth for near-line HDD to be >30%; 5) 8TB ramps should continue to sustain (STX has a lower BOM) and STX is shipping 10TB Helium drives currently; 6) There is room for gross-margins to trend higher due to cost take out actions that are yet to be realized and 7) HAMR to get deployed around 2018."
Shares of Seagate Technology closed at $33.92 yesterday.
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