UPDATE: Stifel Nicolaus Upgrades Seagate to Buy, Establishes $35 PT

Stifel Nicolaus raises its rating on Seagate (NASDAQ: STX) to Buy from Hold and establishes a $35 target price following the company's reported 2Q12 results.

Stifel Nicolaus notes, "Given the company's strong guidance, positive GM% momentum, LTAs, and benefits from the Samsung acquisition, we believe there is further upside to the Seagate story (despite being late to the party following the +51% YTD move). We view Seagate shares as offering a $18/$40 risk/reward as we increasingly subscribe to the positive structural changes taking place in the HDD industry (consolidation, slowing areal density growth, etc.) – driving our belief that Seagate should be valued off of a $6-$7/sh. normalizing non-GAAP EPS story."

STX closed at $21.14 a share on Tuesday.