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- Seagate Technology (NASDAQ:STX) and Western Digital (NASDAQ:WDC) were in focus on Friday as Citi reiterated its Buy ratings on the storage makers and added a 90-day catalyst watch to Western Digital.
- Shares of both companies were little changed in premarket trading.
- After several quarters of the storage market dealing with customers digesting inventory, capex cuts and layoffs, it looks as if the storage market is finally turning around, Citi said, citing “pent-up” demand led by the hyperscalers.
- And with the industry still capacity constrained as a result of the previous cuts, and increased demand, that should be supportive of both margins and profitability for both Seagate and Western Digital, Citi added.
- As a result, Citi boosted its price target on Seagate to $120 from $110 and increased its price target on Western Digital to $95 from $90.
- Additionally, Citi opened up a 90-day upside short-term view on Western Digital, citing “increased confidence” in NAND pricing and undershipping due to demand, which should support flash gross margins. There is also further potential to unlock value as the flash business is spun out later this year, Citi said.