Seagate Analyst Says Recent Stock Underperformance A Buying Opportunity: Retail Agrees

Data storage devices company Seagate Technology Holding plc’s (STX) shares are poised for outperformance after their recent lean run, according to an analyst

Seagate stock has fallen more than 20% from its late-January high of $111.91.

Morgan Stanley’s Erik Woodring said he sees the recent underperformance as a buying opportunity. The analyst maintained an ‘Overweight’ rating and a $138 price target for the stock. 

Woodring said he believes the risk of solid-state drive (SSD) disruption to hard disk drive (HDD) has been overblown in the last two weeks. He noted that the concerns were exacerbated by Meta Platforms' (META) announcement that it intends to adopt QLC SSD, preferring it over 16-20 terabyte (TB) nearline HDDs. He also reiterated the stock’s “Top Pick” status.

He added that reports said Meta would downsize its HDD procurement plans toward the end of the year.

Woodring said Pure Storage's (PSTG) announcement that it was making inroads with SSDs for lower-level cold storage workloads also weighed down on Seagate stock.

Allaying these concerns, the Morgan Stanley analyst said Meta-cited use cases are isolated for now. The analyst said SSDs may have disrupted markets such as PCs, consumer electronics etc., but HDDs maintain their competitive advantage when it comes to data centers.

“HDD’s will remain the primary storage medium in the cloud data center, and with data growth expected to accelerate storage needs, both HDDs and SSDs can benefit from a ‘rising tide lifts all boats’ dynamic,” Woodring said.

STX sentiment and message volume March 21, as of 5 am ET | Source: Stocktwits

On Stocktwits, sentiment toward Seagate stock remained ‘bullish’ (66/100) but the message volume tapered off to ‘low’ levels.

Sharing a technical chart, a bullish watcher said the stock is still on an up-trending path.

Seagate ended Thursday’s session down 0.62% at $88.38. Notwithstanding the recent weakness, the stock is still up 3.2% so far this year.

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