Seagate's (STX) Dividend Hike Called 'Aggressive' at Susquehanna

Susquehanna analyst Mehdi Hosseini sees Seagate Technology (NASDAQ: STX) dividend increase as "aggressive", even amidst operational synergies associated with MOFCOM lifting of "hold separate" restrictions announced earlier today.

"While we certainly view the yield as attractive, we believe STX's aggressive capital allocation program may hinder the company's ability to adjust to a rapidly changing storage environment - that may require increased organic/inorganic investment," Hosseini commented. "For context, STX's annual dividend amounts to a domestic cash outlay of ~$750M alone, while the incremental WDC interest expense associated with the SNDK acquisition likely comes out to ~$600M annually. As such, we offer this comparison for illustrative purposes only, to show how STX's dividend can actually be deployed in more business-enhancing ways, rather than N-T shareholder value."

The firm reiterated a Neutral rating and price target of $45.00

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 $37.13 yesterday.

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