UBS Cuts Price Target on Seagate Technology (STX) to $34 Following Negative Pre-Announcement
UBS reiterated a Sell rating on Seagate Technology (NASDAQ: STX), and cut the price target to $34.00 (from $36.00), following a negative 1Q16 pre-announcement.
Analyst John Roy commented, "After the negative preannouncement the question of the day was, why that big of a gross margin hit? The company has 80% variable costs so it should have been able to mitigate the profit hit, however, it told us that the shortfall in nearline was not something they could react to quickly enough. Total units came in at 47mn and revenue at the low-end of guidance, both as we expected. The company said pricing was like last quarter, but demand was lukewarm, which is not a surprise as Intel said data center was weaker than expected."
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Shares of Seagate Technology closed at $39.56 yesterday.