-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:
Q3 results exceeded expectations with revenue of $3.11B (+44% Y/Y) beating consensus of $2.96B and non-GAAP EPS of $4.10 (+116% Y/Y) crushing expectations for $3.50. STX's outlook was even more impressive, with Q4 guidance midpoints of $3.45B in revenue and $5.00 in EPS beating by 9% and 26%, respectively. Gross margin of 47.0% (+1,080 bps Y/Y) and operating margin of 37.5% (+1,400 bps) demonstrate impressive pricing power and a rising HAMR mix, while FCF of $953M exceeded expectations for $762M and roughly quadrupled Y/Y, helping net leverage decline to 0.7x from 1.1x last quarter. Perhaps most important, nearline capacity (90% of exabytes shipped in Q3) is now nearly sold out through CY 2027, with customer discussions extending into 2028, a significant extension from Q2's update (sold out through CY 2026). Data center revenue of $2.5B accelerated to 55% Y/Y growth, and we see a long runway as AI inferencing elevates demand for high-capacity nearline drives, with Mozaic 4+ (44TB per drive) leading the way.