Data storage demand is strong. That should boost this stock, Morgan Stanley says
Seagate Technology Holdings could see its shares nearly double as data storage demand stays strong, according to Morgan Stanley. The investment bank rates Seagate overweight and raised its 12-month price target on the stock a fraction, to $1,200 from $1,187, suggesting nearly 82% upside from Monday’s close. “We remain convicted in [hard disk drives] earnings upside despite an elongated catalyst path,” analyst Erik Woodring said Tuesday in a note to clients. “Stronger demand/pricing checks support beat-and-raises, while current valuation discounts an overly punitive cycle-end [and] we see favorable tactical setups.” Demand for hard disk drives has recently outpaced supply, the analyst said. There is a 400-exabyte shortfall in HDDs, according to HSBC. The hard disk drives market looks “like memory a year ago – margins remain well below peak and pricing is accelerating, with a more meaningful … inflection still ahead,” Woodring wrote He added that Seagate’s recent spot deals have priced in a range of two to five times contracted levels. That should drive further upside to the stock, Woodring said. Morgan Stanley’s call matches the consensus on Wall Street, where 24 of 27 analysts rate Seagate a buy or strong buy, with just 3 rating it a hold, LSEG data shows. Seagate shares have slumped 23% in just the past month, but remain higher by 140% year to date and 208% in the past 12 months.
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