STX Seagate Technology Holdings PLC

Shares of Seagate Technology plc (STX) hit a new 52-week high of $56.04 on Dec 20, Friday, eventually closing at $55.66. The closing share price also represents an extraordinary one-year return of 83.7% and a year-to-date return of 74.21%.

Some of the optimism is due to the company’s focus on the enterprise segment which is also expected to boost its prospects over the long term. Exponential growth in data storage in the cloud signals potential acceleration in cloud deployments in the near term.

Therefore, Seagate is investing heavily in high-capacity storage devices that would support expansion of cloud infrastructure and cloud applications. Apart from this, the focus shift toward enterprise would reduce Seagate’s dependence on the PC market.

Moreover, Seagate boasts an enriched product portfolio and with the higher mix of original equipment manufacturer business, the company is expected to benefit in the long run. Moreover, the storage solutions provider is coming up with customized products to cater to new customers and gain traction in the storage markets.

Moreover, Seagate has expanded its solid state drive (SSD) portfolio and has made investments in the fast evolving PCIe (Peripheral Component Interconnect Express) storage market. The company has also introduced thin hybrid drives to cater to the increasing demand of the mobile market.

However, Seagate faces stiff competition from Western Digital (WDC), Hitachi, Samsung and Intel in the storage market and from SSD pureplays such as SanDisk (SNDK), Micron (MU) and Fusion-io.

According to Trendfocus, in the third quarter of 2013, Seagate’s HDD market share declined sequentially to 39.7% from 40.4% compared to a marginal decline in Western Digital’s market share (44.7% from 44.9%) over the same period of time.

Additionally, pricing pressures, customer concentration and a declining PC market are the other headwinds for the company.

Currently, Seagate has a Zacks Rank #3 (Hold).

 
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