Seagate stock is in the limelight after the company beat earnings estimates for the fiscal second quarter of 2018, and posted an excellent revenue for the month of January. The most important thing to note in the results was the company’s HDD revenue. Analysts think that the results show that the HDD business segment still has a lot of potential. In the second quarter, Seagate shipped a whopping 87.5 million exabytes of memory, up 28% year-over-year. Total HDD revenues in the quarter increased by 2%, reversing a two-year long trajectory of declines. About 40% of the HDD revenue came from the Enterprise segment, which shows that the Enterprise is ready to spend a lot on the HDD memory devices, mainly because the Enterprise companies do not always need high-performance memory systems. Instead, they need cost-effective solutions.
Overall, Seagate’s revenue totaled $2.914 billion, much better than the consensus estimate of $2.86 billion.
Seagate stock also made headlines earlier this month after a report published by Seeking Alpha claimed that the company had bought over 4% stake in Ripple, one of the world’s largest cryptocurrencies. Research shows that Seagate’s stake in Ripple amounts to about $1 billion.
Analysts believe that the growing Cloud storage and data center market will provide a big catalyst to Seagate. The Cloud-storage sector is hungry for massive amounts of GBs. The sector doesn’t need SSDs and can rely on HDDs. According to an estimate by Markets and Markets, the cloud storage market is expected to grow at a CAGR of 25.8% through 2021.
Seagate has a strategy to shift its focus to higher-capacity drives. This will help the company in cutting costs and increasing margins. Seagate is working on several products to compete with competitors like Western Digital. Seagate is set to launch a 20TB HDD in 2019. The company is also planning to launch a 16TB HDD to take on Western Digital.
Seagate stock is up over 68% over the last 6 months. Several analysts bumped up their ratings and price targets for the company after the latest quarterly report. Investment firm Baird increased its price target for Seagate shares to $48 on Jan. 30. UBS also increased its price target for Seagate stock to $36 on the same date. On the other hand, Morgan Stanley said in a report Jan. 30 that it expects Seagate shares to hit $51.
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