Brean Murray: Seagate Has Ample Resources To Complete Buyback

Brean Murray Carret & Co. has published a research report on Seagate Technology

after the company reported December quarter results that were in-line with expectations. In the report, Brean Murray writes "STX has ample financial capacity to retire the entire $2B in repurchase authorization – ~30% of shares, or we believe an incremental $0.80 - $1.00 in EPS to CY12 if fully executed exiting CY11 (so perhaps up to $10 in incremental earnings power using a 10x P/E). Retiring $2B in stock at the current price of ~$14 would provide STX the opportunity to retire ~142M shares, or 30% of the current shares outstanding.STX commented that while consumer, PC, and China were a bit softer than expected (later in Dec), it fully believes demand will remain firm for the year and that very solid demand trends remain for corporate spending. STX declined to comment on CY11 industry unit potential, but believes its channel is fairly well balanced. STX sees some potential for the drive industry to become component constrained during 2H11 if demand remains seasonal (so say drive growth of 7% - 10% y/y, or 695M – 715M units)." Brean Murray maintains its Buy rating and $18 price target. Seagate Technology closed yesterday at $14.13.