Market Overview

Analyst Busts Seagate-XRP Play, Advises To Sell On The Strength

Share:
Analyst Busts Seagate-XRP Play, Advises To Sell On The Strength
Related STX
Earnings Scheduled For November 2, 2018
12 Stocks To Watch For November 2, 2018
Western Digital: A Long-Term Value Play (Seeking Alpha)

Seagate Technology PLC (NASDAQ: STX) rallied Monday on a Seeking Alpha post that it could own $7.8 billion in Ripple, the majority owner of XRP. But the ostensible cryptocurrency play may not be as profitable as it appears.

The Rating

Susquehanna Financial Group analyst Mehdi Hosseini maintained a Neutral rating on Seagate with a $39 price target.

The Thesis

For one, the figures presented in the original report are highly speculative.

According to author ValueStreet Research, Seagate had invested in Ripple’s Series A and B funding rounds, which suggests about 4.3-percent ownership of the firm, which itself owns 61 percent of then-$3 XRP. These base figures suggest Seagate owns about $7.8 billion in Ripple.

But Susquehanna anticipates Seagate owns between 2 and 4 percent of Ripple valued between $2.5 billion and $5 billion.

Additionally, this investment in Ripple is not a direct investment in the XRP cryptocurrency, but is an investment in Ripple Labs.

“STX's investment in Ripple Labs is intriguing, but we do not view this as a material upside driver given that it is an equity investment (not token ownership) and as such, is not a source of liquid cash,” Hosseini wrote in a note.

He advised selling Seagate on Monday's Ripple-related strength and waiting for announcements from Seagate on its use of blockchain technology.

Seagate spokesperson Jenny Myers told Benzinga in an emailed statement Tuesday, "Seagate is an investor in Ripple. However, I cannot confirm the company's percentage stake in Ripple at this time."

Price Action

At time of publication, shares were trading up 7.2 percent at $46.04.

Related Links:

Crypto Comparisons: How Bitcoin, Litecoin, Ethereum, Ripple, Dash, And IOTA Moved In 2017

New Year Predictions: Bitcoin Drops, Ripple Rises, Retail Takeovers, And The Trillion-Dollar Market Cap

Latest Ratings for STX

DateFirmActionFromTo
Jan 2019UBSMaintainsSellSell
Nov 2018Morgan StanleyMaintainsOverweightOverweight
Nov 2018RBC CapitalMaintainsSector PerformSector Perform

View More Analyst Ratings for STX
View the Latest Analyst Ratings

Posted-In: Blockchain Mehdi Hosseini ripple Ripple LabsAnalyst Color Top Stories Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (STX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MDRXKeyBancUpgrades0.0
ANETNomuraUpgrades260.0
CNPRBC CapitalUpgrades34.0
FISVOppenheimerUpgrades88.0
FNDUBSUpgrades37.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Is AES Corporation A Great Pick For Value Investors?

Cousins Properties Boosts Strength With $1B Credit Facility