Seagate Technology Holdings PLC (NASDAQ:STX) is expected to report robust results for its second fiscal quarter, driven by continued strength in data center demand and seasonal improvements in its consumer and VIA segments, according to Bank of America.
In a note to clients, the bank reiterated its Buy rating on Seagate shares and raised its price target to $400 from $320, citing stronger visibility into revenue and margin growth. Seagate shares were last at $326.23.
Bank of America analysts forecast Seagate’s fiscal Q2 revenue at $2.78 billion and adjusted earnings per share of $2.85, exceeding Street expectations of $2.74 billion and $2.81 per share. The company is expected to ship around 1.3 million HAMR units in the quarter, representing a small but meaningful gain in unit market share.
“Data center demand remains strong, and we see gross margins improving sequentially in every quarter this fiscal year,” the bank wrote. Analysts model Q2 gross margins at 41%, in line with Street estimates, and project continued expansion into the March quarter.
Seagate’s long-term target for incremental margins remains at 50%, with the potential for upside from internal laser usage and any additional supply. The company plans to return at least 75% of free cash flow to shareholders through opportunistic buybacks while reducing debt.
Bank of America also raised its full-year fiscal 2026 revenue and EPS estimates to $11.2 billion and $11.71, respectively, up from $11.1 billion and $11.49 previously. The firm cited secular demand from cloud storage and growth in higher-capacity HAMR hard drives as key drivers of long-term revenue and margin improvement.
Seagate is scheduled to report Q2 results after market close on January 27.