-- Seagate Technology (STX) is "even stronger for longer," with Morgan Stanley reaffirming it as a "Top Pick" after fiscal Q3 results were driven by stronger data center demand, pricing strength and AI-driven HDD demand.
The investment firm said in a Wednesday note that the rising adoption of AI applications is boosting HDD demand from hyperscalers and additional growth opportunities emerging from neocloud and sovereign cloud customers.
Management also indicated that nearline capacity is effectively booked through June 2027 and expects sequential growth in revenue, profitability and cash flow for at least the next five quarters.
The brokerage lifted its long-term outlook. It is now projecting 2027 earnings per share of about $43 supported by stronger pricing, margin expansion and sustained free cash flow. Gross margins could surpass 50% earlier than expected and continue increasing beyond prior peak assumptions, according to the note.
Morgan Stanley has an overweight rating on the stock and raised its price target to $767 from $582.
Shares of Seagate Technology were up more than 14% in Wednesday trading.
Price: $661.95, Change: $+82.92, Percent Change: +14.32%