FBN Securities maintained a Sector Perform rating on Seagate Technology (NASDAQ: STX) and lowered its price target to $60.00 (from $65.00). The change follows Q2 results.

Analyst Shebly Seyrafi, "The company reported a slight revenue miss due to lower than expected HDD ASP and in line NG EPS. Moreover, the company is guiding for the FQ3/Mar. quarter TAM to be only 135M units, down ~8% Q/Q from 147M (above guidance of 145M units) as concerns about the slower economy in Europe (~20% rev.) as well as seasonal declines in the client and retail markets weigh in. Europe normally would have been up ~5% in the December quarter, but instead was down 5%. Some supply constraints exist in the cloud market as well, and this supply challenge is expected to last a few quarters."

"Pricing in the cloud and client markets were slightly more aggressive in FQ2 than in the prior five quarters. We believe that the reasons for this are twofold: 1.) STX was a key share gainer in the September quarter (STX gained 2.3pp of share Q/Q then, primarily from WDC), and both WDC and Toshiba responded on price, 2.) MOFCOM has still not provided approval to WDC to fully integrate with HGST, so for now there are in effect five players in the client market (these players are STX, Samsung, WDC, HGST, and Toshiba),and 3.) Toshiba is focusing on gaining share as we think that this company will focus on increasing its market share from its ~16% level. It is somewhat encouraging that in the last few weeks, pricing in the cloud has firmed a bit," continued the analyst.

"We think that STX will be more opportunistic and repurchase more of its shares, particularly if these shares go below $60. Last quarter, STX repurchased only $18M of its shares, far below the $183M level in FQ1/Sept," he added.

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Shares of Seagate Technology closed at $63.98 yesterday.