Seagate Technology (STX) stock generated returns of 38.0% in the first half of 2018. The stock closed at $56.47 on June 29. Seagate beat earnings estimates in the fiscal third quarter[1. fiscal Q3 2018 ended March 30, 2018] by 9.8% and by 9.6% in the fiscal second quarter.[2. fiscal Q2 2018 ended December 29, 2017] Analysts have a median price target of $55.00 for Seagate Technology, which indicates that the stock is trading at a premium of 2.6% to analyst estimates.
Among Seagate’s peers in the storage space, Hewlett Packard Enterprise (HPE) and NetApp (NTAP) are trading at discounts of 29.0% and 3.5%, respectively, to median analyst estimates. While HPE stock has risen close to 3.0% this year, NetApp stock is up 43.0% in 2018.
Data growth key driver for storage companies
In the previous part of this series, we saw how the growth in connected devices could lead to exponential growth in data creation. This is expected to increase demand for data storage solutions. Rapid growth in data centers and cloud computing verticals that use HDDs (hard disk drives) could drive Seagate’s revenues.
NetApp is depending on its Data Fabric strategy and other solutions to acquire new customers, expand its presence among existing customers, and create new business opportunities.
Analysts expect Seagate’s revenues to rise 3.5% year-over-year to ~$11.2 billion in fiscal 2018, and its earnings per share are estimated to rise 29.0% to $5.32. NetApp’s expected revenue and earnings growth rate figures stand at 5.3% and 18.0%, respectively, in fiscal 2018.