Seagate Technology (STX): Strong Quarter As Indicated By Preannouncemnt, Raising PT - Susquehanna

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.

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 $34.32 yesterday.

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