Needham & Company Downgrades Seagate Technology (STX) to Buy
Needham & Company downgraded Seagate Technology (NASDAQ: STX) from Strong Buy to Buy with a price target of $50.00 (from $65.00).
Analyst Richard Kugele commented, "Despite the overall September quarter TAM being above guidance, high-capacity drives were the culprit behind the negative pre-announcement. Datacenter and cloud service provider demand was largely as expected, but without any upside in 4 and 6TB (which the company had expected). Combined with the absence of a fully qualified 8TB (and a market adoption shift to that capacity point) STX significantly missed EPS expectations in the quarter. We see this issue as STX-specific (and solvable), but have reduced estimates to reflect the new dynamic, and lower our target & rating as a result. Downgrading to Buy from Strong Buy with a $50 target (11x NTM EPS of $4.55) down from $65."
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Shares of Seagate Technology closed at $47.80 yesterday.