Bank of America analysts have recently increased their price target for Seagate Technology Holdings PLC (NASDAQ:STX) to $605 from $450, indicating a higher level of confidence in the company’s earnings growth and sustained demand. This positive outlook comes just ahead of Seagate’s upcoming quarterly report.
In addition to raising the price target, the firm has also adjusted its forward estimates for Seagate. They now project fiscal 2026 revenue to reach $11.7 billion with earnings per share of $13.65, up from their previous forecasts of $11.4 billion and $12.97. The decision to raise the valuation multiple to 25 times estimated calendar 2027 earnings, compared to the previous 23 times, reflects expectations for continued margin expansion and positive long-term estimate revisions.
Analysts anticipate Seagate to report fiscal third-quarter revenue of approximately $3.02 billion and earnings per share of $3.70 when the company discloses its results after the market closes on April 28th. This forecast exceeds current consensus estimates, with strength in data center demand expected to offset the typical seasonal weakness in edge and IoT markets during the March quarter.
Cloud infrastructure and enterprise storage growth are predicted to remain significant drivers for Seagate. Analysts estimate that the company shipped around 186 exabytes of storage in the quarter, including approximately 1 million heat-assisted magnetic recording (HAMR) drives. Shipments of HAMR units for the full fiscal year are projected to reach around 7 million.
Looking ahead to the fiscal fourth quarter, Bank of America forecasts revenue of $3.2 billion and earnings per share of $4.20, once again surpassing consensus estimates. Gross margins are expected to expand sequentially to about 47.3%, supported by pricing strength and cost efficiencies associated with newer HAMR technologies.
The report also highlights the continued progress in HAMR adoption, with two customers completing qualification of Seagate’s 40-terabyte drives. The transition from traditional perpendicular magnetic recording (PMR) to higher-capacity HAMR products is expected to enhance margins, with incremental margins projected to exceed the company’s long-term 50% target.
Analysts have also noted improved visibility from long-term contracts, indicating that a significant portion of Seagate’s nearline storage capacity for calendar 2026 is already covered by orders, with some purchase commitments extending into early 2027. This suggests a strong foundation for future growth and stability within the company.
Overall, the positive outlook from Bank of America reflects a belief in Seagate’s ability to capitalize on ongoing trends in data storage and infrastructure demand, positioning the company for continued success in the coming years.
