Seagate stock soared Thursday in reaction to its fiscal second-quarter earnings report that beat analyst estimates, as the company also indicated healthier growth and profitability was ahead.
The Seagate Technology earnings report arrived after the market close Wednesday. The company is a leading provider of disk drives and other data storage products. Its primary competitor is Western Digital, which reports quarterly results late Thursday.
Seagate stock pulled back after climbing more than 16%. Shares closed at 103.68, up 7.7% on the stock market today. Shares hit a record high of 117.67 on Jan. 5.
The company reported adjusted earnings of $2.41 a share on revenue of $3.12 billion. Analysts expected Seagate to report earnings of $2.36 a share on revenue of $3.11 billion. Results were for the quarter ended Dec. 31. Revenue climbed 18% from the year-ago period.
In the earnings call with analyst that followed, Chief Financial Officer Gianluca Romano raised the company's long-term non-GAAP operating margin target to a range of 18% to 22%. That's up from a previous target of 15% to 20%.
Seagate now expects revenue growth for its June 2022 fiscal year to be up 12% to 14%. That's above it previous forecast for a low double-digit increase.
"We believe the structural changes in the industry combined with Seagate's disciplined execution will support a higher operating margin over time," Romano said.
Seagate Stock: Short On Earnings Guidance
Seagate estimated fiscal third-quarter revenue at a midpoint of $2.9 billion, plus or minus $150 million. In addition, the company said it expects adjusted earnings at a midpoint of $2 a share, plus or minus 20 cents. Analysts expected earnings of $2.07 on revenue of $2.92 billion.
UBS analyst Timothy Arcuri maintained a buy rating on Seagate stock and price target of 120.
"Results and guidance were solid as the company continues to do a nice job managing supply chain which is still pressuring what it ships," Arcuri wrote in a note to clients. "Overall though, underlying demand remains solid, particularly from cloud customers for nearline/high capacity hard disk drives."
"The calendar year was capped by strong December quarter performance including our highest revenue level in over six years, supported by cloud data center demand for our high capacity nearline products," Seagate Chief Executive Dave Mosley said in written remarks with the earnings release.
Western Digital stock climbed 2.7%, near 56.
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