Why This Analyst Is 'Throwing In The Towel' On Seagate
Analyst Mehdi Hosseini said that apart from Seagate Technology’s September quarter pre-announcement, the downgrade was also due to the fact that “the delay in getting 8 TB Nearline drives to market has resulted in share loss.”
Justification
Hosseini believes the earliest that the company could begin regaining market share would be the March quarter. Until there is evidence of market share gains, Hosseini would prefer to stay on the sidelines.
“In addition, Seagate Technology’s Enterprise SSD strategy will likely need more time than some think before it delivers material results while competition is increasing,” the Susquehanna report stated.
Hosseini also believes that the company would need to put in more effort to reduce its footprint in the client and mission critical HDD segment, “given secular declines from SSD penetration.” This would help improve the company’s overall margin profile.
The FY 16 and FY17 EPS estimates have been lowered from $3.76 to $3.12 and from $4.75 to $4.00, respectively.
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Latest Ratings for STX
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Jan 2022 | Benchmark | Maintains | Buy | |
| Jan 2022 | Stifel | Maintains | Buy | |
| Jan 2022 | Deutsche Bank | Maintains | Hold |
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