Seagate Technology‘s stock (STX 8.49%) is rapidly climbing in Tuesday’s trading session. As of 3 p.m. ET, the memory chip company’s share price had surged by 9%, according to data from S&P Global Market Intelligence.
In a bullish move, Morgan Stanley upgraded Seagate this morning, lifting its rating on the stock from equal weight to overweight. The firm’s analysts also revised their one-year price target on Seagate stock from $73 per share to $115 per share.
Despite a 56% increase over the past year, Seagate stock remains around 17% below its peak. Morgan Stanley’s latest coverage suggests that the storage hardware specialist is poised to reach a new valuation high in the near future.
Anticipating a strong recovery in the data storage market, Morgan Stanley expects Seagate to benefit from its leading position in heat-assisted-magnetic-recording (HAMR) technologies, driving improved sales and earnings performance. The firm also believes that the rise of generative AI will boost demand and serve as a significant performance driver.
With the data storage industry experiencing an upturn and AI-related demand on the rise, Seagate’s profitability could see a significant boost. Morgan Stanley’s analysts project that the storage specialist’s near-term earnings performance could exceed expectations by 25-30%.
Furthermore, the potential for sustained growth driven by AI-related demand could lead to higher valuation multiples for Seagate and other data storage companies, as investors recognize the importance of being connected to the artificial intelligence revolution.
In conclusion, Seagate Technology’s stock is on the move, fueled by positive analyst sentiment and strong growth prospects in the data storage and AI markets. Investors will be closely watching to see how Seagate capitalizes on these trends in the coming months.
Please note that Keith Noonan and The Motley Fool have no positions in the stocks mentioned and The Motley Fool abides by a disclosure policy.
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