Key Takeaways
- Seagate stock climbed approximately 2% during Wednesday’s trading session, reaching roughly $786 following third-quarter earnings that significantly exceeded Wall Street projections — posting $4.10 per share against the anticipated $3.51, while revenue surged 44.1% compared to last year, hitting $3.1 billion.
- Wall Street firms including Cantor Fitzgerald upgraded their outlook, with Cantor setting a $1,000 price target, while Morgan Stanley and JPMorgan similarly increased their forecasts; the overall analyst rating stands at “Moderate Buy.”
- The company unveiled its AI Storage Suite alongside Mozaic 4, its next-generation HAMR technology, capable of storing up to 44TB on a single drive unit.
- Fourth-quarter projections point to $3.45 billion in sales and $5 earnings per share, while management anticipates gross margins crossing the 50% threshold for the first time in company history.
- Recent insider transactions show several executives offloading shares, while valuation metrics reveal a trailing P/E near 74 and a debt-to-equity standing at 3.16.
Seagate Technology (STX) delivered third-quarter fiscal 2026 results that exceeded expectations across the board. The data storage leader posted earnings of $4.10 per share, significantly outpacing the Wall Street consensus estimate of $3.51. Sales reached $3.1 billion, representing a 44% increase compared to the same period last year and surpassing analyst projections of $2.96 billion. Shares traded near $786 on Wednesday, gaining approximately 2% during the session.
Seagate Technology Holdings plc, STX
The company’s non-GAAP gross margin reached 47% during the reporting period. Leadership now projects this metric will exceed 50% in the upcoming fourth quarter — a milestone that would represent a company record.
Data center operations powered the impressive performance. This division generated $2.5 billion in revenue, marking a 55% year-over-year increase and representing 80% of overall sales. The company delivered 199 exabytes during the quarter, up 39% from the previous year, with nearline capacity reportedly secured through the end of 2027.
Cash generation remained robust, with free cash flow totaling $953 million for the quarter, representing a 57% sequential increase. Over the trailing twelve months, free cash flow stands at approximately $2.63 billion.
Looking ahead, management issued fourth-quarter guidance calling for $3.45 billion in revenue and $5 in earnings per share, both figures exceeding prior market expectations.
Wall Street Analysts Boost Price Targets
The analyst community reacted swiftly to the results. Cantor Fitzgerald elevated its price objective from $700 to $1,000 while maintaining an “overweight” rating. Morgan Stanley increased its target from $582 to $767, and JPMorgan raised their forecast from $525 to $775, both maintaining “overweight” positions. Loop Capital adjusted their target upward from $700 to $800.
The consensus rating currently stands at “Moderate Buy” with an average price target of $709.13 — notably below the stock’s current trading level.
According to TipRanks, STX receives a “Strong Buy” designation from 17 analysts surveyed over the past three months, comprising 14 buy recommendations and 3 hold ratings.
Advanced HAMR Technology Drives Growth
A significant portion of the optimistic outlook centers on Seagate’s proprietary heat-assisted magnetic recording (HAMR) technology. The company’s Mozaic 4, representing the second generation of this platform, commenced shipments in late March 2026 and delivers storage capacity of up to 44TB per drive — approximately 30% greater than the previous version. Leadership anticipates this product will comprise the majority of HAMR exabyte shipments by the conclusion of calendar year 2026.
The forthcoming Mozaic 5 product aims to achieve 50TB per drive capacity, with qualification shipments scheduled for late 2027.
The company also introduced its AI Storage Suite spanning Seagate, FireCuda, and LaCie product families, offering configurations up to 256TB with Thunderbolt 5 compatibility.
Regarding financial health, Seagate retired $641 million in gross debt during the third quarter, bringing total year-to-date debt reduction to approximately $1.1 billion. Net leverage improved to 0.7x, and Fitch Ratings recently upgraded the company’s credit rating.
However, certain considerations warrant attention. The stock currently trades at a trailing P/E ratio near 74.6 and maintains a debt-to-equity ratio of 3.16. Multiple company insiders have sold shares in recent weeks, including EVP James Ci Lee who reduced his holdings by 68%.
While the average analyst price target of $709.13 falls below current market prices, forward-looking estimates — with expected $5 EPS next quarter — suggest a forward P/E closer to 30x.
