Seagate Drops 8% In Extended Trading On Earnings Miss, Weak Outlook

Shares of Seagate (STX) fell 8.4% in Tuesday’s extended trading after 4Q earnings disappointed. Adjusted earnings of $1.20 per share in 4Q missed analysts’ estimates of $1.29. Revenues of $2.52 billion also fell short of Street estimates of $2.61 billion.

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Seagate’s CEO Dave Mosley, said that “continued economic uncertainty and COVID-19 related disruptions impacted demand in other key end markets including video and image applications, mission-critical and consumer markets and also impacted profitability as we incurred higher logistics and labour costs.”

Moreover, Seagate’s 1Q outlook also fell short of analysts’ expectations. The company forecasts revenues and adjusted earnings of $2.3 billion and $0.85 per share, respectively. The Street estimates 1Q revenues and earnings at $2.44 billion and $1.07 per share, respectively.

Following the quarterly results, Rosenblatt Securities analyst Kevin Cassidy cut the stock’s price target to $63 (30% upside potential) from $65, while maintaining a Buy rating. Meanwhile, RBC Capital analyst Mitch Steves lowered the price target to $48 from $54 along with Cowen analyst Karl Ackerman, who cut the price target to $44 from $50.

Currently, the Street has a cautious outlook on STX. The Hold analyst consensus is based on 3 Holds and 1 Sell versus 1 Buy. The average price target of $50.25 implies an upside potential of 3.5%. (See STX stock analysis on TipRanks).