Seagate Sock Jumps Ahead Of Q2 Results As It Replaces Apple As Morgan Stanley’s Top IT Pick: Retail Upbeat

Seagate Technology Holdings, Inc. (STX) stock experienced a pre-earnings rally on Tuesday after a Morgan Stanley analyst named the data storage devices company his top information technology (IT) pick, replacing tech giant Apple, Inc. (AAPL).

Analyst Erik Woodring attributed his optimism to Seagate's high short interest, greater confidence in June quarter revenue recovery, and his above-consensus gross margin outlook.

Seagate stock climbed 4.00% to $10158 ahead of the company’s fiscal year 2025 second-quarter results.

On average, analysts expect the company to report non-GAAP earnings per share (EPS) of $1.88 and revenue of $2.32 billion. This compares to the year-ago EPS and revenue of $0.12 and $1.55 billion, respectively.

When the company released its first-quarter results in late October, it guided second-quarter headline metrics to $1.85, plus or minus $0.20, and $2.30 billion, plus or minus $150 million, respectively. 

Peer Western Digital Corp. ($WDC) preannounced a potential second-quarter earnings shortfall last week. 

Woodring said he is now increasingly comfortable with the persistence of the hard disk drive (HDD) cycle. He estimates second-quarter EPS and revenue of $1.89 and $2.3 billion, respectively., for Seagate.

However, the analyst’s third-quarter expectations are muted. He lowered his EPS estimates to $1.65 and revenue to $2.1 billion, citing supply chain issues.

To account for the estimate changes, the analyst trimmed the price target for Seagate stock to $129 from $133. He maintained an ‘Overweight’ rating.

Woodring expects things to improve in the fourth quarter as supply chain issues abate and capacity shipped snaps back. 

STX sentiment and message volume January 21, 2025, as of 3:25 pm ET | Source: Stocktwits

On Stocktwits, sentiment toward Seagate stock improved to ‘bullish’ (67/100) from ‘neutral’ a day ago. Retail chatter grew louder, with message volume spiking to ‘extremely high’ levels.

In late-afternoon trading, the stock climbed 3.73% to $101.32.

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