Wedbush analyst Matt Bryson upgraded Seagate Technology Holdings Inc (NASDAQ:STX) from Neutral to Outperform with a $100 price target.

The re-rating reflected an improving nearline Hard Disk Drive (HDD) demand environment that creates a likely upside to Bryson’s near-term expectations and his increased conviction that Heat Assisted Magnetic Recording (HAMR) is a “good” technology, with the ramp of HAMR only likely to augment favorable nearline trends.

According to the analyst, more certainty about HAMR progress creates intermediate to longer-term room for share, margin, and profit expansion. 

Also Read: Seagate Is Set for Success, Analyst Highlights Demand and Pricing Strength

Bryson’s checks fit with STX’s suggestion the most recent hold-up in qualification is a component issue rather than a more significant technology problem. While the analyst noted there are still some manufacturing challenges that likely need to be resolved to get the full benefit of HAMR, he noted the fundamental issues are behind STX.

Bryson noted Broadcom Inc’s (NASDAQ:AVGO) recent STX’s SoC work purchase as validating HAMR’s technology path/progress as Broadcom CEO Hock Tan notably does not invest in green shoots.

Finally, with differentiated enterprise drives traditionally having seen margins of 40%+, Bryson noted room for STX to significantly lift its profitability in the out years as suggested by his new fiscal 2026 earnings estimates.

Bryson published his new 2026 estimates for EPS of $11.68, revenues of $11.761 billion, gross margin of 35.1%, and operating margin of 25.6%, which could support a far more substantial price target. His projections attempt to begin to account for the benefits of HAMR with regard to HDD, ASPs, and gross margins.

Bryson projected fourth-quarter revenue and EPS of $1.87 billion and EPS of $0.78.

Seagate stock gained 49% in the last 12 months. Investors can gain exposure to the stock via First Trust Dorsey Wright Momentum & Dividend ETF (NASDAQ:DDIV) and IShares Future Cloud 5G And Tech ETF (NYSE:IDAT).

Price Action: STX shares traded higher by 1.82% at $87.47 at the last check Wednesday.

Also Read: Micron, Seagate, Western Digital Poised for Upswing, Driven by NAND Price Surge, Analyst Forecasts

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