Stifel Reiterates Hold on Seagate Technology (STX) Following 1Q16 and 2Q Guidance

Stifel reiterated a Hold rating on Seagate Technology (NASDAQ: STX) following the company's 1Q16 earnings report and 2Q guidance. Seagate has guided F2Q16 at $2.9-$3.0B with a GM% at 25.5%-26.0% and opex of ~$485M.

Analyst Aaron Rakers commented, "Maintain Hold; reduce our F2016 and F2017 estimates from $12.8B / $4.71 and $13.2B / $5.72 (pre-preliminary results) to $11.7B / $3.01 and $12.3B / $4.57, respectively. We initiate a F2018 estimate at $12.3B / $4.75. Seagate has guided F2Q16 at $2.9-$3.0B with a GM% at 25.5%-26.0% and opex of ~$485M, leaving us with a non-GAAP EPS estimate of $0.76/sh., or 35% below our prior (pre-preannouncement) estimate. With a belief that investors will (should) focus on the company’s balance sheet position, $2.2B of net debt (highest net debt we have seen at Seagate; excludes Dot Hill acq.), we would note that Seagate believes it can generate annualized FCF in the ~$1.5-$1.7B/annum range (reflects capex curtailment to ~$700M/annum)."

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 $38.06 yesterday.

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