Thomas Weisel Partners Optimistic For Seagate Technology (STX)

Thomas Weisel Partners analyst Doug Reid maintained his Overweight rating for shares of Seagate Technology (NASDAQ: STX), with a 12-month price target of $25.

Reid wrote in his fiscal 4th quarter earnings preview that he expected Seagate Technology to report revenue slightly above the Wall Street consensus estimate of $2.9 billion but in line with Thomas Weisel Partners' $3 billion forecast.

The analyst also said that he expects Seagate Technology to announce a sizable share repurchase program of over $500 million.

The Thomas Weisel Partners analyst wrote, "our 12-month price target of $25 is based on a 1.0x EV/S multiple on our CY10 revenue estimate of $12.46bn and compares to a 1.8x EV/S multiple for the IT hardware group and 0.7x EV/S for key peer WDC. Since December 2003, STX has traded at an average EV/S of 1.0x (high 1.58x, low 0.19x). We believe that superior operating leverage in STX’s earnings model merits a slight premium in valuation for STX over WDC. Price target risks include weaker than expected seasonality, overcapacity in the industry, mis-execution on new product ramps and competitive threats to STX's dominant lead in enterprise."