On Wednesday, Mizuho Securities demonstrated confidence in Seagate Technology (NASDAQ:STX) by increasing the firm's price target on the stock to $125 from the previous $110, while continuing to recommend an Outperform rating.
Seagate Technology reported its June quarter earnings, surpassing expectations with $1.89 billion in revenue and $1.05 earnings per share, compared to the consensus of $1.86 billion and $0.77 respectively.
The company also provided guidance for the September quarter, forecasting revenues of $2.1 billion and earnings per share of $1.40, which is higher than the consensus estimates of $2.06 billion in revenue and $1.17 earnings per share.
The analyst highlighted several key points from the earnings report, including a doubling in Seagate's nearline cloud revenue year-over-year and strong expectations for enterprise/OEM demand in the second half of 2025.
Additionally, nearline capacity commitments are in place through the end of 2024. There was also positive news from China, where demand for HDDs is exceeding expectations, especially for 24TB CMR and 28TB SMR drives.
Seagate is advancing its technology with the ramp-up of HAMR (Heat-Assisted Magnetic Recording), expecting qualification at a leading Cloud Service Provider by the September quarter, with multiple qualifications from US and China cloud customers to follow.
Moreover, the upcoming Mozaic 4+ technology is set to enable 33% more capacity at cost parity when compared to the current Mozaic 3+.
In light of these developments, Mizuho has raised its estimates, citing Seagate's advantageous position in the market upcycle, potential for increased average selling prices, and ongoing strong performance in nearline and HAMR qualifications.
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