Seagate Can Gain At Least 20% From Current Levels

(RTTNews) - Despite issuing strong first-quarter outlook, Seagate Technology Plc (STX) shares closed Tuesday's session with a decline of nearly 8%. We think investors should take advantage of the weakness in the stock, as the stock has at least 20% upside from the current levels within the next 6 months. This means the shares could climb at least to $42 from the current price of $35.1.

October 11, Seagate said it expects to report revenue of approximately $2.8 billion, and GAAP and non-GAAP gross margin of approximately 29% for the first quarter. The forecast looked upbeat vs. the company's earlier expectations for Q1 revenue of at least $2.7 billion and non-GAAP gross margin of at least 27%. Analysts are modeling Q1 revenues of $2.74 billion. Seagate cited better-than-expected demand for its high capacity enterprise HDD product portfolio. The company also expects to report HDD unit shipments of approximately 39 million.

Steve Luczo, chairman and chief executive officer of Seagate Technology commented, "This quarter we returned to our long-term targeted margin profitability and operating income ranges and generated significant cash flow from operations," adding, "With the ever-growing demand for HDD storage capacity and our focus on providing the most comprehensive product portfolio with leading technology, Seagate should continue to deliver solid financial performance and strong shareholder return for the years to come."