Seagate Technology Expected To Deliver Worst Quarter In Years

Although many investors are talking about Exxon Mobil Corporation XOM and Chevron Corporation CVX ahead of the announcement of their quarterly financial results, scheduled for Friday morning, before the market opens, other popular companies are also reporting on the last day of the week.

Among them, there’s Seagate Technology PLC STX, which, according to Estimize, is expected to deliver fourth-quarter earnings of $0.65 per share on revenue of $2.922 – the Street’s consensus. The crowd is considerably more bullish, and projects earnings of $0.83 per share on sales of $3.088 billion. Management, for its part, guided revenue of $2.9 billion.

The current estimates imply a substantial decline from the earnings of $1.10 per share on revenue of $3.301 delivered in the fourth quarter of 2014, and from last quarter’s earnings of $1.08 per share on sales of $3.33 billion.

It should be noted from the chart above that Seagate has managed to either meet or beat the Street’s consensus in the last five consecutive quarters. Thus, investors could expect earnings of at least $0.65 this quarter.

The second chart here features a history of the evolution of sentiment over the quarter. As it can be seen, both the Street and the crowd’s consensus estimates now stand at their lowest, meaning that they have become increasingly bearish on results as the report date loomed.

Analyst Opinion

In a recent report, Pacific Crest analyst Monika Garg assures that Seagate will see margins widen over fiscal 2016, on the back of a model shift towards enterprise drives.

Related Link: Hard Disk Stocks: Estimates Cut On Wall Street, Guidance Expected To Be Lower

Joe Wittine of Longbow Research also weighed in on the company recently. He notes that, the "weakening" investor sentiment in its PC is business is "playing-out" and absent a clear catalyst, the analyst is suggesting investors remain on the sidelines on Seagate. Wittine also suggested that, “the ultimate growth and profitability of the company's systems business remains ‘murky,’” a recent Benzinga article –linked above- reads.

Morgan Stanley analyst Katy Huberty is also cautious regarding Seagate. The expert recently downgraded the stock to Underweight, from Overweight, lowering her price target to $34.00 from a previous $49.00. Check out her arguments in this article.

Shares of Seagate surged 3.78 percent on Thursday trading, to then fall more than 2 percent in after-hours.