Seagate Earnings: Cyclical Recovery Drives More Positive Results, but Shares Remain Overvalued

We maintain our fair value estimate for no-moat Seagate at $67 following a strong fiscal fourth quarter and fiscal 2024 earnings report. In the June quarter, speedy demand recovery and healthy pricing pulled up Seagate’s top line and margins, which exceeded our expectations slightly. As prices continue to stabilize over the year, we expect Seagate to reap the benefits of recovering demand. Nearline cloud solutions continue to be a significant demand driver, given the industrywide shift toward cloud computing and artificial intelligence-driven workloads. We moderately adjust our estimates to account for a faster-than-anticipated recovery for hard disk drive sales, but persisting longer-term cyclicality keeps us seeing shares as overvalued. Shares were up 6% afterhours as the market continued to focus on the short-term upside and overshoot long-term value.