Seagate stock trades at a discount with strong demand for mass capacity products.

From Nasdaq: 2025-02-13 15:00:00

Seagate Technology Holdings plc (STX) is trading at a discount with a forward P/S ratio of 2.05X, lower than the sector and industry averages. STX stock has gained 14.3% in the past year and closed at $99.21. The company is witnessing strong mass capacity demand, especially for nearline products, with revenues doubling in the fiscal second quarter.

The increasing demand for nearline products aligns with a 50% growth in cloud capital expenditures by customers in 2024. Seagate expects HDDs to play a key role in enabling AI applications and anticipates delivering capacity increases through further technological advancements. The company’s HAMR technology is expected to drive long-term demand for mass-capacity storage solutions.

Seagate expects third-quarter revenues of $2.1 billion and non-GAAP earnings of $1.7 per share. The company aims to maintain cost efficiency and price adjustments to improve gross margins. However, headwinds like supply constraints and high debt levels remain concerns for STX. Analysts have revised earnings estimates downward, indicating bearish sentiment towards the stock.

Seagate’s robust performance and growth drivers make it an attractive investment, but concerns like supply chain constraints and competition pose risks. Holding STX stock remains prudent, given the industry leadership and potential for gains. Currently, STX carries a Zacks Rank #3 (Hold), with analysts cautious about the stock’s outlook.



Read more at Nasdaq: Seagate Stock Trades at a Discount: Buy, Sell or Hold?