On Tuesday, Seagate Technology (STX) stock experienced a significant surge in price, climbing 9% by 3 p.m. ET. The driving force behind this growth is a note published by Morgan Stanley this morning, which upgraded its rating on Seagate from equal weight to overweight and raised its one-year price target from $73 per share to $115 per share.
Despite an impressive 56% increase in the last year, Seagate stock remains down about 17% from its high. However, Morgan Stanley’s analysts believe that the storage hardware specialist will soon reach new heights of valuation thanks to the recovery of the data storage market and its position in HAMR technologies. The firm expects that these factors will lead to stronger sales and earnings performance, with demand related to generative AI being a key driver of growth.
With the data storage industry experiencing an upward trend and AI-related demand continuing to grow, Seagate’s profitability has the potential to see significant improvements. Morgan Stanley’s analysts predict that Seagate’s earnings performance in the near term could exceed expectations by 25% to 30%. Additionally, they believe that investors may assign higher valuation multiples to Seagate and other data storage stocks as a result of their connection to the AI revolution.
