Seagate Technology Holdings Plc (NASDAQ:STX) shares gained Wednesday after the company reported better-than-expected fourth-quarter results and issued first-quarter guidance above Wall Street estimates.

Rosenblatt analyst Kevin Cassidy said Seagate delivered a “clean beat-and-raise” quarter, with stronger pricing, a widening supply-demand imbalance and higher long-term earnings estimates reinforcing his bullish outlook.

He also maintained a Buy rating on Seagate and raised his price target to $1,400 from $1,300. Fourth-quarter revenue of $3.63 billion topped the high end of guidance as well as his and consensus estimates.

Total shipments reached 218 exabytes, while blended pricing rose 6.7% sequentially and 10.6% year over year to $16.65 per terabyte. Cassidy said stronger pricing accounted for most of the revenue upside.

Margins Expand Sharply

Seagate’s adjusted gross margin expanded to 52.7%, up 570 basis points sequentially and above Rosenblatt and consensus estimates. Cassidy attributed the upside to long-term agreement repricing, richer Mozaic mix and continued Edge repricing as tight NAND supply supported pricing.

Adjusted operating margin reached a record 44.6%, while adjusted diluted EPS of $5.71 beat Rosenblatt’s $5.02 estimate and the $5.10 consensus estimate.

Guidance Points Higher

Seagate’s September-quarter guidance confirmed a stronger pricing regime for the hard-disk-drive industry, Cassidy said. The company guided revenue to $4.1 billion, plus or minus $100 million, and adjusted EPS to $7.30, plus or minus 20 cents, both above prior Rosenblatt and consensus estimates.

He said management indicated that the supply-demand imbalance has widened and that production above contracted volumes is clearing at strong pricing. Cassidy expects revenue, gross margin and profitability to improve sequentially throughout fiscal 2027.

Estimates Move Up

Rosenblatt raised its fiscal 2027 EPS estimate to $34.16 from $29.42 and its fiscal 2028 estimate to $57.04 from $51.36. Cassidy said newly negotiated long-term agreements are resetting at higher prices, making pricing the key driver of earnings revisions through fiscal 2028.

He said consensus estimates still have room to rise as long-term agreements reset higher over the next several quarters.

Top ETF Exposure

  • Roundhill Memory ETF (NASDAQ:DRAM): 5.26% Weight
  • First Trust US Equity Opportunities ETF (NYSE:FPX): 6.84% Weight
  • Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF): 4.54% Weight

Significance: Because STX carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

STX Price Action: Seagate Technology Hldgs shares were up 2.56% at $766.58 at the time of publication on Wednesday, according to Benzinga Pro data.

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