Seagate Technology (STX): Few Surprises But Vague Guidance - BMO
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BMO Capital analyst, Tim Long, maintained his Market Perform rating on Seagate Technology (NASDAQ: STX) but raised his price target to $33 from $31 after the company reported few surprises in the quarter, following the better preannounced results last week.
Enterprise growth continues to support the business, but the analyst is not convinced that management’s view of a return to revenue growth is realistic given the headwinds to the rest of HDDs and the limited flash exposure. FY2017/2018 EPS estimates go to $3.49/$3.43 from $3.04/$3.34.
Vague guidance. For the December quarter, management expects approximately flat revenue and sequentially higher gross margin. While we like the company’s recent success in getting margins into the 27-32% target range, we are concerned about management visibility into TAM, including both the predictability of cloud demand and deliberate reduction of focus on lower-end units.
Shares of Seagate Technology closed at $34.32 yesterday.
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