Seagate Technology (STX): Strong Quarter As Indicated By Preannouncemnt, Raising PT - Susquehanna
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Susquehanna analyst, Mehdi Hosseini, raised his price target on Seagate Technology (NASDAQ: STX) to $38 from $35 after the company's results were consistent with the preannouncement on 10/11, and the Gross Margin expansion strategy is clearly working.
STX has now expanded its Gross Margins by ~680 bps from its Mar Q '16 low of 22.7%, largely a result of improved mix from strong Nearline share gains (particularly at the 8TB capacity), as well as a strategic move away from low-end PC drives and higher emphasis on 1TB Notebook and 2TB Desktop. As such, given mix and cost cutting initiatives, STX implied on the call that reaching the 30% Gross Margin level for the Dec Q is within reach.
The analyst increased FY17/FY18 EPS to $3.55/$3.63 from the prior $3.00/$3.28 on more favorable GM assumptions but the Neutral rating remains.
Shares of Seagate Technology closed at $34.32 yesterday.
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Related EntitiesSusquehanna International Group of Companies
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