UPDATE: Morgan Stanley Reiterates On Seagate Technology PLC On Expanding Long-Term Potential

In a report published Monday, Morgan Stanley analyst Katy L. Huberty reiterated an Overweight rating on Seagate Technology PLC (NASDAQ: STX), and raised the price target from $65.00 to $66.00.

In the report, Morgan Stanley noted, “Investments in adjacent cloud opportunities drive revenue growth and leverage l-t, but drag down FY15 EPS estimates. The company expects to achieve a $1B revenue run rate from its cloud systems and solutions business (formed from Xyratex, EVault, and LSI's flash business) in 5-6 quarters compared to FY15 guidance of $650-$700M. By 2017, STX targets total flash + cloud revenue of $2B, which it believes is achievable without incremental acquisitions. Investment in these markets will likely increase OpEx towards the upper end of the 13-15% guidance range over the next 1-2 years, but mid-to-low single digit revenue growth should begin to drive leverage in FY16.”

Seagate Technology PLC closed on Friday at $61.01.