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Maxim issued a company report on Seagate Technology PLC
after their EPS beat expectations due to strong operating expense control. Maxim reiterated a Buy rating for Seagate and raised their price target from $68 to $70.
Nehal Chokshi, an analyst at Maxim, 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 their $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 are currently trading at $58.51, up 1.87 percent.
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