Seagate Technology Prepares for Q2 Earnings Release Amid Mixed Market Performance
Earnings Forecast Shows Significant Improvement
Singapore-based Seagate Technology Holdings plc (STX) specializes in data storage technology and infrastructure solutions throughout Singapore, the U.S., and beyond. With a market capitalization of $18.3 billion, Seagate ranks among the world’s largest hard disk drive manufacturers. The company is set to report its second-quarter earnings on Wednesday, January 22.
Analysts Predict Positive Growth
In anticipation of the earnings report, analysts estimate that Seagate will announce adjusted earnings of $1.67 per share, a notable increase from the loss of $0.02 per share recorded in the same quarter last year. Impressively, the company has consistently outperformed analysts’ earnings expectations for the last four quarters, posting an adjusted EPS of $1.40 last quarter, surpassing estimates by 7.7%.
Future Earnings Look Promising
Looking forward to fiscal 2025, Seagate is projected to achieve an adjusted EPS of $7.18, a substantial rise from $0.69 in fiscal 2024. Moreover, fiscal 2026 estimates predict a remarkable year-over-year earnings surge of 50.3%, hitting $10.79.
Stock Performance Trails Behind Market Indices
Over the past year, STX shares have increased nearly 4.5%, significantly trailing the S&P 500 Index’s return of 23.7% and the Technology Select Sector SPDR Fund’s 23.8% increase within the same period.
Mixed Response Following Recent Earnings
Despite better-than-expected results, Seagate’s stock dropped 8.1% in the session following its Q1 earnings release on October 22. The company reported a robust 49.1% year-over-year revenue growth, totaling $2.2 billion, alongside improved profitability. However, it also faced a stark 25.2% decline in operating cash flows to $95 million, attributed to a 46.4% rise in receivables to $628 million and high inventory levels. Additionally, ongoing trends towards solid-state drives (SSD) and cloud solutions are projected to further impact Seagate’s traditional hard disk drive (HDD) sales.
Strong Start of the Year and Dividend Increase
On a positive note, Seagate’s gross margin for the quarter reached 32.9%, marking the highest level in over a decade. Furthermore, the company increased its quarterly dividend, indicating strong confidence in its ability to maintain profitable growth moving forward.
Analysts Reach a Moderate Consensus
The overall outlook for STX stock is moderately bullish, reflected in a “Moderate Buy” consensus rating. Among 20 analysts covering the stock, 10 recommend a “Strong Buy,” one suggests a “Moderate Buy,” seven advise a “Hold,” and two recommend a “Strong Sell.” The mean price target stands at $121.89, suggesting a notable upside potential of 41.1% from current levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
