Rosenblatt Did Not See Any Surprise From Seagate, Western Digital - Read Why

  • Rosenblatt did not expect any surprises from Seagate Technology Holdings PLC STX and Western Digital Corp WDC pre-announcing their March quarter results.
  • The June quarter outlook is a different story. 
  • Continued COVID-related shutdowns in China may further delay security system deployments that use HDD storage. 
  • June quarter HDD revenue could have some upside if the companies re-purpose manufacturing capacity from this market to mass storage.
  • Meanwhile, the NAND flash market's production issues may have created shortages in 2QC22, followed by oversupply in 2HC22. 
  • Therefore, it continued recommending the HDD pureplay, STX, for its stable business model, high dividend, and valuation. 
  • Rosenblatt remained skeptical of the NAND Flash market, particularly considering the increased capacity in 2HC22. 
  • Rosenblatt maintained its Buy rating for STX and Neutral rating for WDC.
  • Wells Fargo had also slashed the price targets of the companies. Susquehanna downgraded the stocks.
  • Price Action: WDC shares traded higher by 1.59% at $50.29 on the last check Thursday. STX traded lower by 1.43% at $84.50.
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