Brean Capital Remains Bullish On Seagate Technology

In a report published Thursday, Brean Capital analyst Ananda Baruah reiterated a Buy rating and $83.00 price target on

. In the report, Brean Capital noted, “We reiterate our very bullish view on WDC and STX (WDC $150 TP or 42% appreciation excl. any impact from MOFCOM and STX $83 TP or 32% appreciation). STX reports Dec Q EPS BMO on 1/26 and WDC AMC on 1/27. Our core L-T thesis of secular GM expansion and ongoing multiple expansion continues to play out, and we use target EV/FCF multiples of 13x (Figure 1; the median of what similar cash flow companies trade). We ultimately believe WDC and STX could trade to $170 and $100. For WDC, a $170 valuation reflects a ~14x EV/FCF (15x normalized post-MOFCOM EPS of ~$11.00), and a STX valuation of $100 reflects a ~14x EV/FCF (15x normalized EPS of $6.50). We note that IF STX were to execute on its Enterprise strategy and new business model (revenue growth 5%+ and OM of 15%+), then normalized EPS could be $7.00 - $8.00 and the stock could be >$110.” Seagate Technology closed on Wednesday at $63.29.