Analyst Note| William Kerwin |
No-moat Seagate closed out its fiscal fourth quarter in strong fashion, and we’re raising our fair value estimate for the HDD leader to $75 per share, from $70 per share, behind stronger 2022 assumptions. The firm saw continued strong demand for its mass capacity drives that drove strong top-line growth and robust margin expansion. We maintain our expectation for high mass capacity demand to continue over the long term and think that a tight supply environment in fiscal 2022 will keep pricing erosion at bay and boost margins in the short term. Seagate’s share price has come back down to earth after steep appreciation in the first half of the calendar year, and we now view shares as fairly valued.