On Wednesday, Morgan Stanley (NYSE:MS) updated its outlook on Seagate Technology (NASDAQ:STX) shares, raising the firm's price target for the stock to $133.00, up from the previous target of $115.00. The company's Overweight rating on the stock remains unchanged.
The adjustment comes amid expectations of strong hard disk drive (HDD) supply and demand dynamics, which are anticipated to drive pricing growth and margin expansion. Morgan Stanley's revised forecast suggests a significant 33-40% upside potential for Seagate's shares compared to the Street's earnings per share (EPS) estimates for fiscal years 2025 and 2026.
According to Morgan Stanley's analysis, the pricing and demand environment for HDDs is favorable, which could lead to higher profitability for Seagate. The firm now projects that Seagate could reach a peak EPS of approximately $15, a notable increase from the previous estimate of $11.
The updated price target of $133 reflects Morgan Stanley's confidence in Seagate's ability to capitalize on the current market conditions. The Overweight rating indicates that the analyst believes Seagate's stock will outperform the average return of the stocks covered by Morgan Stanley over the next 12 to 18 months.
Seagate Technology, known for its data storage solutions, including HDDs, will likely continue to be monitored by investors as market conditions evolve. The increased price target by Morgan Stanley underscores the potential for Seagate to benefit from the current industry trends.
InvestingPro Insights
Following Morgan Stanley's optimistic revision of Seagate Technology's (NASDAQ:STX) price target, current data from InvestingPro aligns with some of the positive sentiments. Analysts expect Seagate's net income to grow this year, which supports Morgan Stanley's projection of increased profitability for the company. Additionally, Seagate is perceived as a prominent player in the Technology Hardware, Storage & Peripherals industry, and analysts anticipate sales growth in the current year, which may further bolster the company's financial performance.
InvestingPro Data reveals a market capitalization of $22.11B for Seagate, indicating its significant presence in the market. Despite a negative P/E Ratio of -82.2, the company's PEG Ratio stands at 0.41, suggesting potential for earnings growth when considering the price of its shares. Moreover, Seagate has demonstrated a strong return over the last year, with a 1 Year Price Total Return of 83.74%, closely approaching its 52-week high at 96.05% of the peak price.
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