Evercore ISI Downgrades Seagate Technology (STX) to Underperform
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Evercore ISI analyst C.J. Muse downgraded Seagate Technology (NASDAQ: STX) from In Line to Underperform with a price target of $45.00 (from $55.00).
The analyst comments "Near-term, we see limited upside from current levels, given that the company has already guided above seasonal for both 3Q/4Q18. We also believe the market has gotten a bit complacent around NAND pricing, especially with respect to demand elasticity for NAND driving increasing HDD cannibalization. We look for continued softness in the client business (still 21% of STX revenues) and believe rising price competitiveness of QLC NAND could quickly become a headwind exiting CY18 and into 2019. With topline likely flattish at best, GMs heading lower, and worse than expected NAND pricing driving increased potential for cannibalization of HDDs, we see risk to the downside for STX after an excellent run (and quite frankly we clearly missed it YTD). In turn, we see lower utilization levels leading to declining GMs for STX – typically the key predictor of share performance for HDD stocks."
Shares of Seagate Technology closed at $53.54 yesterday.
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