Tuesday, Seagate Technology (NASDAQ:STX) stock received a positive outlook from a major financial institution. Citi initiated coverage on the company's stock with a Buy rating and set a price target of $110.00.
The firm's stance is buoyed by several factors including a recovery in the hard disk drive (HDD) market and anticipated demand growth driven by artificial intelligence (AI).
The report from Citi points to checks within the industry that suggest a consistent cyclical recovery for HDDs, particularly from enterprise customers and hyperscale data center operators.
This recovery is expected to contribute to Seagate's revenue and earnings growth. Additionally, the firm highlighted the role of AI in boosting storage demand, which is likely to benefit Seagate.
Citi also noted that Seagate is poised to benefit from rational capacity additions and cost improvements stemming from Heat-Assisted Magnetic Recording (HAMR) technology. These advancements are anticipated to support the company's ability to maintain a trajectory of increased revenue and earnings.
The financial institution's target price implies a more than 20% expected total return (ETR), including the dividends Seagate pays to its shareholders. This optimistic projection is rooted in the combination of the aforementioned industry recovery and technological advancements.
Seagate Technology, known for its data storage solutions, has thus received a noteworthy vote of confidence from Citi, signaling potential for investors. The company's stock may see increased attention following this new coverage and the establishment of a $110 price target.
InvestingPro Insights
Seagate Technology's recent endorsement by Citi aligns with some of the insights from InvestingPro. Analysts have recently revised their earnings upwards for the upcoming period, reflecting optimism about the company's future performance. This is particularly noteworthy as Seagate is recognized as a prominent player in the Technology Hardware, Storage & Peripherals industry. However, it's important to note that analysts also anticipate a sales decline in the current year, which could present challenges for the company.
InvestingPro Data shows a market capitalization of $19.56 billion and a significant dividend yield of 3.01%, which has been maintained for 14 consecutive years, underscoring Seagate's commitment to shareholder returns. Additionally, the company has experienced a large price uptick over the last six months, with a 26.93% total return over this period, highlighting the stock's recent strong performance.
Prospective investors may find value in the 16 additional InvestingPro Tips available for Seagate, which provide deeper insights into the company's financial health and market position. To access these valuable tips and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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