Evercore ISI has increased its price target for Seagate Technology from $750 to $1,000 and maintained its "Outperform" rating following recent meetings with the company's Chief Financial Officer Gianluca Romano and the investor relations team.
Four key factors support long-term growth. Analyst Amit Daryanani highlighted a clear rationale for Seagate's sustained growth: first, effective supply management maintains market balance; second, continuous advancements in key technologies like areal density and Heat-Assisted Magnetic Recording (HAMR); third, "strong" AI-driven data storage demand; and fourth, long-term agreements extending to 2027 provide visibility for future profitability.
The CFO emphasized that Seagate's current production capacity is "fully booked by customers on a long-term basis," indicating a solid supply leadership position in the high-performance storage market.
AI computing demand is fueling the storage market. With the explosive growth of AI applications, enterprise demand for massive data storage and processing is surging. As a leading global hard disk drive supplier, Seagate's large-scale deployment of HAMR technology is seen by the market as key to meeting next-generation data centers' high-density storage needs. Evercore expects the company's gross margin to potentially improve further as areal density continues to increase.
Performance exceeded expectations and market performance. Seagate's latest quarterly report, released in late April, showed earnings per share of $4.10, significantly surpassing the market expectation of $3.51. Revenue reached $3.11 billion, a year-over-year increase of 44.1%. The company's guidance for fourth-quarter EPS is $4.80 to $5.20, also exceeding analyst expectations.
Since the earnings release, Seagate's stock price has risen steadily from around $640 to close at approximately $830 on May 11. Cantor Fitzgerald had previously raised its price target to $1,000, and Evercore's follow-up action further strengthens Wall Street's optimistic consensus on the stock.
Risk warnings: high valuation and insider selling. However, the market has also noted potential risks. Seagate's price-to-earnings ratio has risen to approximately 77 times, a relatively high historical level. Additionally, over the past three months, several insiders, including the CFO, have collectively sold about 53,000 company shares, realizing approximately $53 million. This may reflect management's cautious attitude toward the current stock price level.
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