Seagate Technology (STX): Restructuring Confirms Dividend and Future EPS Growth - Needham
Needham & Company analyst, Richard Kugele, believes that with Seagate Technology (NASDAQ: STX) restructuring announcement last night, some of the major final pieces of Seagate 3.0 have fallen into place. The reduction of roughly 14% of the workforce (and a revised footprint for 35-40M quarterly units), combined with a focus on high-capacity cloud drives positions the company well. The positive preannouncement, which reflects only the initial steps in transforming the company, also shows the power of this shipment mix. Investors fearful about cash flow generation and continuing to pay the dividend should be able to breathe more easily after last night.
No change to Buy rating but increase the target to $33 from $31 based on 10x F17E EPS of $3.26.
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Shares of Seagate Technology closed at $24.09 yesterday.