Key Takeaways
- Seagate’s shares climbed approximately 2% during Wednesday’s session, reaching around $786 following strong Q3 fiscal 2026 results that showed earnings per share of $4.10 versus analyst expectations of $3.51, alongside revenue growth of 44.1% year-over-year reaching $3.1 billion.
- Wall Street firms responded positively with Cantor Fitzgerald increasing its price objective to $1,000, while Morgan Stanley and JPMorgan similarly boosted their targets; overall analyst sentiment stands at “Moderate Buy.”
- The company unveiled its AI Storage Suite and introduced the Mozaic 4 HAMR technology, its second-generation heat-assisted magnetic recording product capable of delivering capacities up to 44TB per drive unit.
- Management’s Q4 projections anticipate revenue of $3.45 billion with earnings per share of $5, while gross margins are forecasted to surpass 50% for the first time in company history.
- Recent insider selling activity occurred alongside a high trailing P/E ratio of approximately 74 and a debt-to-equity measurement of 3.16.
Seagate Technology (STX) delivered third-quarter fiscal 2026 results that exceeded Wall Street’s expectations across the board. The data storage manufacturer posted earnings of $4.10 per share, significantly outpacing the Street’s consensus forecast of $3.51. Top-line performance reached $3.1 billion, representing a 44% increase compared to the same period last year and surpassing analyst projections of $2.96 billion. Shares traded near $786 during Wednesday’s session, marking an intraday gain of roughly 2%.
Seagate Technology Holdings plc, STX
The company’s non-GAAP gross margin reached 47% during the reporting period. Looking ahead, executives anticipate this metric will exceed the 50% threshold in the upcoming fourth quarter — a milestone that would establish a new company record.
Data center operations powered the impressive results. This business segment generated $2.5 billion in revenue, representing a 55% year-over-year increase and comprising 80% of Seagate’s total revenue. The company delivered 199 exabytes of storage capacity during the quarter, a 39% year-over-year improvement, with nearline capacity obligations reportedly secured through the end of 2027.
Operating cash generation proved robust, with free cash flow of $953 million marking a 57% sequential increase. On a trailing twelve-month basis, free cash flow totals approximately $2.63 billion.
Management’s fourth-quarter guidance maintained the positive momentum. The outlook calls for revenue of $3.45 billion alongside earnings per share of $5, both figures exceeding previous market forecasts.
Wall Street Raises Price Targets
The investment community reacted swiftly to the results. Cantor Fitzgerald increased its price objective from $700 to $1,000 while maintaining an “overweight” stance. Morgan Stanley adjusted its target upward from $582 to $767, and JPMorgan elevated its forecast from $525 to $775, both firms maintaining “overweight” ratings. Loop Capital increased its target from $700 to $800.
The consensus rating currently stands at “Moderate Buy” with an average price objective of $709.13 — notably below current trading levels.
TipRanks data shows STX earning a “Strong Buy” rating from 17 analysts during the past three months, with 14 buy recommendations and 3 hold ratings.
Advanced Storage Technology Drives Growth
A significant portion of the bullish thesis centers on Seagate’s heat-assisted magnetic recording (HAMR) technology platform. The Mozaic 4 product, representing the second generation of this technology, commenced shipping in late March 2026 and provides storage capacity up to 44TB per drive — approximately 30% greater than the previous generation. Company leadership anticipates Mozaic 4 will account for most HAMR exabyte shipments by year-end 2026.
The pipeline includes Mozaic 5, designed to deliver 50TB per drive capacity with qualification units expected to ship in late 2027.
Additionally, Seagate introduced its AI Storage Suite spanning Seagate, FireCuda, and LaCie brands, featuring configurations up to 256TB with Thunderbolt 5 compatibility.
Regarding the balance sheet, the company reduced gross debt by $641 million during Q3, bringing total year-to-date debt reduction to approximately $1.1 billion. Net leverage improved to 0.7x, and Fitch Ratings recently upgraded the company’s credit rating.
However, certain considerations warrant attention. The stock trades at a trailing P/E ratio of approximately 74.6 with a debt-to-equity ratio of 3.16. Recent weeks saw several executives and board members reduce their holdings, including EVP James Ci Lee who decreased his position by 68%.
The average analyst price target of $709.13 currently sits below prevailing market prices, though forward estimates — with projected EPS of $5 for the upcoming quarter — suggest a forward P/E ratio closer to 30x.
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