Seagate Technology stock climbed Wednesday as investors reacted to the hard drive maker's stronger-than-expected fiscal-fourth quarter results. Also, Seagate gave a sales forecast ahead of what analysts previously projected.
Seagate reported Tuesday that it earned an adjusted $1.05 per share on sales of $1.89 billion for the June-ended quarter. On average, analysts projected the Fremont, Calif.-based company would post adjusted earnings of 76 cents per share on sales of $1.87 billion, according to FactSet.
For the same period a year earlier, Seagate posted an adjusted loss of 18 cents per share on sales of $1.6 billion.
For the current quarter, Seagate guided for sales of $2.1 billion at the midpoint of its range. Prior to the company posting its results, analysts were projecting Seagate would tally $2.07 billion in sales for the September-ending quarter.
On the stock market today, Seagate stock added 4% to close at 109.53.
Seagate's HAMR Technology
Seagate is the world's largest manufacturer of hard disk drives. In an earnings release, the company highlighted its new Heat-Assisted Magnetic Recording, or HAMR, technology in hard drives designed to more efficiently store data.
"In fiscal 2025, we are remaining focused on driving profitability and maintaining supply discipline while continuing to execute our mass capacity product road map, anchored by our HAMR technology," Chief Executive Dave Mosley said in the news release. "Our data storage solutions offer our cloud and enterprise customers with cost, power and space advantages that support their investments in critical AI and other data-driven initiatives."
Matt Bryson, an analyst with Wedbush, reiterated a positive outperform rating for Seagate stock following the report.
"We believe STX hit on all the bogeys that matter to investors," Bryson wrote. He increased his price target for the stock to 135, from 130.
Seagate Stock: Cloud Demand
Seagate's stock struggled in 2022 and for the first half of last year, amid a hard drive supply glut and slowing demand from PC makers. Shares are approaching recovery to an all-time high near 116 that Seagate reached near the start of 2022.
In a client note Wednesday, Morningstar analyst William Kerwin said a speedy demand recovery helped power Seagate's results.
Cloud-related nearline (low cost, highly durable storage) solutions, Kerwin wrote, "continue to be a significant demand driver, given the industrywide shift toward cloud computing and artificial intelligence-driven workloads."
But he reiterated his view that Seagate is overvalued at its current price, based on "longer-term cyclicality" for its market.
Seagate Stock: Technical Ratings
Prior to its earnings report, Seagate stock fell less than 1% to close at 105.30 in Tuesday trading. Shares have gained 25% this year compared to a 16.5% gain for the S&P 500. Seagate stock is up 82% compared to 12 months ago.
Coming into the report, Seagate stock had an IBD Composite Rating of 89, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Seagate's IBD Relative Strength Rating was 92 out of 99.
