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Maxim: Seagate Stock Buybacks May Be Indicative Of Future Success


Maxim issued a company report on Seagate Technology PLC (NASDAQ: STX) after EPS beat expectations due to strong operating expense control. Maxim reiterated a Buy rating for Seagate and raised the price target from $68 to $70.

Analyst Nehal Chokshi wrote, "STX reported March quarter revenue of $3.33B (down 2 percent y/y), slightly below our estimate of $3.35B...EPS of $1.08 was 11 percent ahead of our estimate due to ramping operating expense by only $8M q/q versus guidance of $25M q/q. Management highlighted the pullback was in its cloud systems solutions group...Non-GAAP GM of 28.9 percent (up 75bp q/q) was slightly ahead of guidance of 28.5 percent on relative strength of high margin enterprise HDDs which was flat q/q, 8 percent above our estimate and compares to overall units down 12 percent q/q."

Seagate management indicated that PC driven upside is possible. PC OEMs and hyperscale data centers begin their seasonal uptick in June, which could provide upside to its $3.2 billion revenue guidance. Analysts at Maxim note that a lower share count may increase the stock's value in the near term. Company buybacks were valued at $706 million in the previous quarter. Maxim believes that this is evident of continued confidence in the long-term success of the HDD market and Seagate's core business operations.

Shares of Seagate Technology recently traded at $58.94, up 2.6 percent.

Latest Ratings for STX

Oct 2020MizuhoMaintainsNeutral
Oct 2020BenchmarkUpgradesHoldBuy
Oct 2020RosenblattMaintainsBuy

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