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Singapore-based Seagate Technology Holdings plc (STX) provides data storage technology and infrastructure solutions. With a market cap of $20.3 billion, the company designs, manufactures, and markets hard disk drives for enterprise and client compute applications, personal data backup, portable external storage, and digital media systems.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and STX fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the computer hardware industry. STX maintains a strong market position in data storage, driven by its reputation for reliability and innovation by offering diverse products and investments.
Despite its notable strength, STX slipped 17% from its 52-week high of $115.32, achieved on Oct. 15. Over the past three months, STX stock dipped 6.3%, underperforming the Dow Jones Industrials Average’s ($DOWI) 5.9% gains during the same time frame.
In the longer term, shares of STX rose 12.2% on a YTD basis and climbed 12.1% over the past 52 weeks, underperforming DOWI’s YTD gains of 16.3% and 18.2% returns over the last year.
To confirm the bearish trend, STX has been trading below its 50-day moving average since late October. The stock is trading below its 200-day moving average since early December.
STX's underperformance is due to its reliance on HDDs, competition, and emerging technologies. Meanwhile, investors reacted negatively to a weaker outlook despite strong Q1 results, with concerns regarding demand challenges in cloud and enterprise markets. Moreover, profit-taking and cautious market sentiment toward tech also contributed to the decline.
On Oct. 22, STX shares closed up marginally after reporting its Q1 results. The company’s total revenues stood at $2.2 billion, up 49.1% year over year. Its adjusted EPS of $1.58, surpassed analyst estimates of $1.46.
In the competitive arena of computer hardware, Western Digital Corporation (WDC) has taken the lead over STX, showing resilience with a 24.4% uptick on a YTD basis and solid 29.1% gains over the past 52 weeks.
Wall Street analysts are moderately bullish on STX’s prospects. The stock has a consensus “Moderate Buy” rating from the 20 analysts covering it, and the mean price target of $122.17 suggests a potential upside of 27.6% from current price levels.
