Goldman Sachs has started coverage on Seagate (STX, Financial), assigning a Buy rating with a price target set at $170. This move includes coverage of the U.S. sectors focused on semiconductor capital equipment, storage, and foundry. Currently, the semiconductor capital equipment industry is experiencing a stabilizing phase, characterized by a balance of challenges and opportunities that are likely to maintain steady revenue flows across the sector.
The investment firm anticipates that, while there could be more potential risks than gains in the market, a stable revenue environment should persist through 2026. Additionally, the firm views China more as an opportunity than a threat to these companies. Seagate could benefit from upside potential in the hard-disk-drive market, particularly with an expected recovery in NAND memory, which is predicted to rebound by 2026.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 19 analysts, the average target price for Seagate Technology Holdings PLC (STX, Financial) is $121.60 with a high estimate of $155.00 and a low estimate of $68.00. The average target implies an downside of 14.37% from the current price of $142.01. More detailed estimate data can be found on the Seagate Technology Holdings PLC (STX) Forecast page.
Based on the consensus recommendation from 24 brokerage firms, Seagate Technology Holdings PLC's (STX, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Seagate Technology Holdings PLC (STX, Financial) in one year is $96.21, suggesting a downside of 32.25% from the current price of $142.01. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Seagate Technology Holdings PLC (STX) Summary page.
STX Key Business Developments
Release Date: April 29, 2025
- Revenue: $2.16 billion, down 7% sequentially, but a 31% year-on-year increase.
- Non-GAAP Gross Margin: 36.2%, expanded by 70 basis points sequentially and over 1,000 basis points year-over-year.
- Non-GAAP Operating Margin: 23.5% of revenue, increased sequentially.
- Non-GAAP EPS: $1.90, at the top end of guidance range.
- Free Cash Flow: $216 million, up from $150 million in the prior period.
- Hard Drive Revenue: $2 billion, down 8% sequentially.
- Mass Capacity Revenue: $1.7 billion, a 48% year-on-year increase.
- Nearline Shipments: 120 exabytes, down 5% sequentially, up 55% year-on-year.
- Non-GAAP Gross Profit: $781 million, compared to $825 million in the prior quarter.
- Non-GAAP Operating Expenses: $274 million, down 5% quarter-over-quarter.
- Adjusted EBITDA: $563 million, doubling year-on-year.
- Non-GAAP Net Income: $407 million.
- Capital Expenditures: $43 million for the quarter.
- Debt Balance: $5.1 billion, with a net leverage ratio of 2.1 times.
- June Quarter Revenue Outlook: Expected to be $2.4 billion, plus or minus $150 million.
- June Quarter Non-GAAP EPS Outlook: Expected to be $2.40, plus or minus $0.20.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Seagate Technology Holdings PLC (STX, Financial) reported a 31% year-on-year increase in revenue and an 81% growth in non-GAAP gross profit dollars.
- The company expanded its gross margin for the eighth consecutive quarter, achieving the third highest operating margin in its history.
- Seagate's HAMR-based Mozaic drives, the industry's only 3 terabyte per disk products, are ramping up volume to qualified customers.
- The company has strong demand visibility into the first half of calendar 2026, with new build-to-order agreements being negotiated.
- Seagate is effectively managing its debt, having retired approximately $536 million during the quarter, and plans to continue reducing debt in the coming quarters.
Negative Points
- Revenue for the March quarter was down 7% sequentially, limited by temporary supply constraints.
- Mass capacity shipments were down 5% sequentially, despite a 50% year-on-year increase.
- There is potential risk from tariffs, which could impact customer buying decisions and financial performance in future quarters.
- Non-GAAP operating expenses are expected to increase in the September quarter due to an additional week in the period.
- The company faces challenges in maintaining supply-demand balance and managing operational issues that previously affected supply.
