Seagate Technology Holdings (STX) revenue in the fiscal quarter ending in June is poised to rebound on demand for hard disk drives after a cyclical drop, Morgan Stanley said Tuesday in a report.
The firm boosted Seagate to its hardware top pick amid "greater comfort in the HDD demand outlook amidst transitory near-term supply issues and still view Street gross margins as too conservative." the report said.
Recent industry checks showed HDD demand remains "robust," and pricing continues to increase on a quarterly basis, while artificial intelligence growth continues to buoy storage demand, Morgan Stanley said.
Demand trends, technology leadership and strong industry profitability may drive Seagate's positive earnings revisions and lead to "strong outperformance" in the next three to six months.
Morgan Stanley lowered its price target on Seagate to $129 from $133 and maintained its overweight rating on the company.
Seagate shares rose 4.1% in recent Tuesday trading.
Price: 101.71, Change: +4.04, Percent Change: +4.14
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