Bluefin Analysts Express Near-Term Bullishness On Seagate

BlueFin’s John Donovan expects Seagate Technology PLC (NASDAQ: STX) to continue to benefit from rising enterprise demand, driven by data center build outs, as well as higher capacity near-line HDDs and premiums for helium-based solutions.

The Positives

The analyst mentioned that the company has “has finally delivered competitive 6TB-and-above in the near-line space, which will help them mix up smartly and take advantage of the data center buildouts.”

Also, the lack of helium-based solutions in high volume has been improving, although gradually, and Donovan expects Seagate Technology to overcome this, thereby driving the rest of 2016 above the current levels.

“On the client side, STX has decided to cease production of all older Samsung-based notebook products and migrate to a single solution based on their own 1TB/disk 2.5” platform,” according to the BlueFin report.

Near-Term Upside

Donovan explained that offering the entire range of 500GB through 2TB on a single platform helps because it eliminates multiple older product families. This should help increase yields, minimize costs and aid factory decision, as the company right sizes itself to better match the “ever-changing” TAM.

“Bottom line: we think STX will see some nearterm upside but the lack of any SSD strategy concerns us longer-term,” Donovan added.

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