Updated Aug 12 at 4:04pm ET.
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A federal court in California has approved the announcement of a proposed settlement in a securities class action lawsuit. These types of lawsuits are common and usually involve claims that a company misled its shareholders, resulting in financial losses for those who bought the stock during a specific period. While the specific dollar amount of the settlement was not disclosed in the announcement, these legal matters are often covered by insurance and rarely change the long-term outlook for a company of this size. For most owners, this is a routine legal cleanup of a past issue rather than a new threat to the business.
Source: GlobeNewsWire
UBS increased its target from $750 to $900 after the company's recent financial results. This move reflects growing confidence in the demand for high-capacity hard drives as data centers expand to handle AI workloads.
While the new target is still below the average analyst estimate of $1130, the 20 percent jump shows that even more cautious analysts are recognizing the company's improved ability to earn higher profits from its latest disk technology.
Source: UBS
The storage maker reported quarterly earnings of $5.71 per share, well above the $5.10 analysts expected. Revenue reached $3.6 billion for the quarter, capping a year where total sales grew 34 percent to over $12 billion. This growth is being fueled by the massive amount of storage needed for AI, which is reviving demand for high-capacity hard drives.
The most important detail for long-term owners is the jump in profit margins. Gross margin, which shows what is left after manufacturing costs, hit a record 52.7 percent this quarter. This suggests the company's new Mozaic technology is giving it significant pricing power. The business generated $3.1 billion in cash for the year, allowing it to pay down $1.4 billion in debt while still returning $810 million to shareholders through dividends and buybacks.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Citi raised its price target for the company, citing continued confidence in the demand for mass-capacity storage. This type of storage is essential for the massive amounts of data used to train AI models.
While the stock has already seen a significant rise this year, the firm believes the shift toward AI infrastructure still has room to run. This supports our view that Seagate is well-positioned to capture more profit as cloud providers upgrade their data centers with higher-capacity drives.
Wells Fargo upgraded its rating on Seagate, signaling more confidence in the company's ability to grow its earnings. The move comes as the broader storage industry sees renewed interest from big tech buyers.
This upgrade reflects a growing belief that the market for high-capacity hard drives is entering a stronger phase. For Seagate, this means its focus on advanced technology like Mozaic drives is likely to result in higher prices and better profit margins per disk sold.
Analysts recently issued a flurry of price target hikes following the company's strong quarterly earnings report. Most analysts, 29 of 52, rate the stock a buy, and the average target of $1130 suggests 29% upside from today's price.
The company has beaten analyst estimates for eight straight quarters, often by a wide margin. This suggests management is under-promising while the business outruns even bullish forecasts.
| Expectation | |
|---|---|
| EPS | $7.25 |
| Revenue | $4.09B |
GlobeNewsWire · Press release · Aug 11
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