Seagate Technology (STX) tumbled to the bottom of the SP 500 today after beating earnings forecasts but offering below-consensus fourth-quarter sales guidance.
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Seagate Technology dropped 17% to $42.01 today, while the SP 500 dipped 0.1% to 2,387.45.
FBN’s Shebly Seyrafi maintains his Outperform rating on Seagate Technology despite today’s plunge:
So why do we remain bullish? Please note that TTM free cash flow is $1.47B, which is ~10% of the current stock price. This is allowing the company to offer investors a $.63 quarterly dividend, which translates into roughly a 6% dividend yield. [Cloud service providers, or CSPs,] are looking to come back in CH2, which should help the company’s (higher-margin) enterprise business. NG opex, which was $443M last quarter, is expected to go to $430M this quarter and to $400M by the end of C2017. This should help drive operating margin expansion and almost double-digit EPS growth in F2018.
Seagate Technology’s market capitalization fell to $12.4 billion today from $14.9 billion yesterday.