STX
Seagate’s got a pricing problem — in the best way
Seagate just got a fresh thumbs-up from Rosenblatt, and the note reads like an ode to everything investors love: stronger pricing, tighter supply, and a company that somehow beat estimates while also turning the guidance dial higher. Kevin Cassidy kept his Buy rating and raised his price target to $1,400 from $1,300, basically saying the hard-drive market is still giving Seagate room to squeeze more juice out of every terabyte.
Why the stock’s moving
The big story here isn’t just that Seagate had a decent quarter. It’s that pricing is doing a lot of the heavy lifting. Revenue came in at $3.63 billion, total shipments hit 218 exabytes, and blended pricing rose 6.7% sequentially and 10.6% year over year to $16.65 per terabyte. Translation: customers are paying up, and Seagate is not exactly in a mood to apologize for it.
Margins also flexed. Adjusted gross margin jumped to 52.7%, and adjusted operating margin hit a record 44.6%. In analyst-speak, that’s the kind of combo that makes higher earnings estimates feel less like fantasy and more like a spreadsheet with a gym membership.
The part investors should care about
Seagate also nudged its first-quarter guidance above Wall Street expectations, calling for revenue of $4.1 billion, plus or minus $100 million, and adjusted EPS of $7.30, plus or minus 20 cents. Rosenblatt thinks the supply-demand imbalance is widening, and that matters because when production above contracted volumes clears at strong pricing, the profit story can get a lot juicier, fast.
Big picture: Seagate isn’t just benefiting from one good quarter. If pricing keeps resetting higher and supply stays tight, this could turn into a multi-quarter rerating story instead of a one-day victory lap.