Citigroup Remains Bullish On Seagate Technology Following Q4 Print

Joe Yoo of Citigroup reiterated a Buy rating on shares of Seagate Technology STX following its fourth quarter results with a price target lowered to $70 from a previous $74. Yoo notes that the company's quarterly results were “generally in line with expectations” with a one percent miss in revenues. The analyst adds that shares pulled back eight percent on soft guidance but does state that the industry isn't “devolving into its past behavior of irrational pricing.” Yoo states that were some “pockets of aggressive pricing” in PC and nearline drives which is not uncommon even post industry consolidation. Management stated that the impact of these lower prices had a 20 to 30 basis points negative impact to the company's gross margin. Yoo believes that management's gross margin target of 28.5 percent suggests a sequential margin expansion and indicates that the impact of the “irrational pricing” is temporary and not severe. Finally, Yoo suggests that Seagate Technology's results seem to confirm that it lost some market share, likely to Western Digital WDC who may show “meaningful upside” when the company reports its results on Tuesday.