Singapore-based Seagate Technology Holdings plc (STX) engages in the provisioning of data storage technology and infrastructure solutions in Singapore, the U.S., and internationally. With a market cap of $18.3 billion, Seagate operates as one of the largest manufacturers of hard disk drives in the world. It is expected to release its second-quarter earnings on Wednesday, Jan. 22.
Ahead of the event, analysts expect Seagate to report adjusted earnings of $1.67 per share, significantly up from the loss of $0.02 per share reported in the year-ago quarter. Furthermore, the company has consistently surpassed analysts’ earnings estimates in each of the past four quarters. Its adjusted EPS of $1.40 for the last reported quarter exceeded analysts' estimates by 7.7%.
For fiscal 2025, Seagate is expected to announce an adjusted EPS of $7.18, up from $0.69 in fiscal 2024. While in fiscal 2026, its earnings are expected to surge 50.3% year-over-year to $10.79.
STX has gained nearly 4.5% over the past 52 weeks, significantly lagging behind the S&P 500 Index’s ($SPX) 23.7% returns and the Technology Select Sector SPDR Fund’s (XLK) 23.8% surge during the same time frame.
Despite reporting better-than-expected results, Seagate Technology stock plummeted 8.1% in the trading session after the release of Q1 earnings on Oct. 22. The company reported a strong 49.1% year-over-year growth in revenues to $2.2 billion along with significant growth in profitability. However, the company’s operating cash flows plunged 25.2% year-over-year to $95 million as the company has observed a 46.4% increase in receivables to $628 million along with elevated levels of inventories. Additionally, the ongoing shift towards solid-state drives (SSD) and cloud-based solutions is expected to continue negatively impacting Seagate’s traditional hard disk drive (HDD) sales in the upcoming quarters.
Nevertheless, the company had a strong start to the year. Its gross margin of 32.9% for the quarter was the highest achieved in over a decade. Moreover, Seagate raised its quarterly dividend, showcasing confidence in driving profitable growth in the future.
The consensus opinion on STX stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 20 analysts covering the stock, 10 recommend “Strong Buy,” one advises “Moderate Buy,” seven suggest “Hold,” and two advocate a “Strong Sell” rating. Its mean price target of $121.89 indicates a staggering 41.1% upside potential from current price levels.
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