Seagate (STX) Up 39% in the Past Year: Will the Rally Last?

Core Viewpoint - Seagate Technology Holdings plc (STX) is experiencing strong momentum with a 39.4% share price increase over the past year, outperforming the S&P 500 Composite's 28.6% growth [1] Financial Performance - STX's fiscal 2024 revenues are projected to decline by 13.3%, but a significant rebound of 34.7% is expected in fiscal 2025 [1] - Earnings per share (EPS) are anticipated to rise by 126% to 43 cents in fiscal 2024 and by 951% to $4.52 in fiscal 2025 [3] - The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has increased by 59.3% and 6.9%, respectively, in the past 60 days [3] Growth Factors - Seagate is a leading provider of data storage technology, primarily offering hard disk drives (HDDs) and solid-state drives (SSDs) [4] - The company's performance is bolstered by increased demand for mass capacity storage driven by nearline cloud demand and improved sales to cloud customers [4] - Recent product innovations, such as the Mozaic 3+ hard drive platform featuring Heat-Assisted Magnetic Recording technology, position Seagate to capture market share in mass capacity storage [6] Market Outlook - Management expects third-quarter fiscal 2024 revenues to be around $1.65 billion, with a non-GAAP loss projected at 25 cents per share [7] - Incremental improvements in mass capacity demand from cloud and enterprise clients are anticipated to offset seasonal downturns in demand [6] Challenges - Global macroeconomic conditions, particularly a sluggish recovery in China, pose significant concerns for the company [8] - IT budget spending is expected to remain muted amid a volatile macro backdrop, impacting overall demand [8] - The legacy market is forecasted to see a sequential decline in revenues due to lower consumer demand post-holiday season [8]