Seagate Technology plc (STX): Analysts Sets Up An Interesting Tug of War

If you can handle volatility, Seagate Technology plc (NASDAQ:STX) is the stock to watch now. The stock closed lower on 18 December. The shares dropped -0.1 points or -0.27 percent at $37.33 with a light trade volume of 3.898 million shares. After opening the session at $37.17, the shares went as high as $38.06 and as low as $36.75, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $10.9 billion and now has 292.51 million shares outstanding. Seagate Technology plc (STX) stock has lost -14.89 percent of market value in 21 trading days.

STX stock has a trailing 3-year beta of 1.7, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $6.75 a share in the trailing twelve months. The stock’s value has fallen -10.78 percent year to date (YTD) against a decline of -11.16 percent in 12 month’s time. The company’s shares still trade -40.46 percent away from its 1-year high of $62.70 and 1.74 percent up from 52-week low of $36.69. The average consensus rating on the company is 2.9, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Seagate Technology plc (STX) will probably climb 29.09 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $65-month high price target. This represents a whopping 74.12 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $47, which represents a return potential of 25.9 percent when compared to the closing price of the stock of $37.33 on Tuesday, December 18. The lowest price target for the stock is $32 — slightly more than -14.28 percent from STX’s current share price.

History has shown that shares in Seagate Technology plc have gone down on 19 different earnings reaction days and are predicted to add 0.07 percent when the company reports upcoming earnings. Investors will get their next glimpse of STX’s Q2 earnings on February 04. Analysts are forecasting revenue to suffer decline of -6.3 percent to $2.73B in the fiscal second quarter, while earnings are seen soaring by nearly -12.84 percent to $1.29 per share. It earned $1.7 per share, better than the $1.55, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $2.99B, better than the $2.96B analysts expected. Earnings are estimated to increase by 126.3 percent this year, 1.22 percent next year and continue to increase by 6.06 percent annually for the next 5 years.

Let’s take a look at some insider activity at Seagate Technology plc (NASDAQ:STX) and see the pattern. The earliest insider trade took place on 12/07/2018. Valueact Capital Master Fund, gathered a total of 400 thousand shares of company at average share price of $40.61. The total for the purchase was set at $16.24 million. After this transaction, the account balance stood at 27.3 million shares. The stock lost -7.83 percent since that insider purchase. On 12/03/2018, Luczo Stephen J, Director, sold 30 thousand shares at a price per share of $44.16. This removed 1.32 million shares from the insider’s fortune and the stock saw a -15.24 percent retreat in value since the news became public. This transaction left 1.42 million shares in the Director account.

On 11/30/2018, EVP, Sales & Marketing Murphy James J performed a sale transaction worth $580.96 thousand. This sale at $42.53 each has eliminated 13.66 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -11.99 percent decrease since the transaction was reported. The insider now is left with 20.96 thousand shares remaining in the account. Valueact Capital Master Fund,, who performs the job, bought 124.13 thousand shares for $5.21 million. The acquisition occurred on 11/30/2018 was priced at $41.95 per share. The share price plunged -10.77 percent since the reporting date. Valueact Capital Master Fund, now left with a stake of 26.89 million STX stock worth $1003.87 million after the insider buying.

The stock is currently hovering around the first support level of $36.7. Below this, the next support is placed in the zone of $36.07. Till the time, the STX stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 31.66 on daily chart, which may remain a cause for comfort. If the price breaks below $36.07 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $38.01 mark may result into a pull-back move towards $38.69 level.

Shares of Seagate Technology plc (STX) are trading at a P/E ratio of 13.1 times earnings reported for the past 12 months. The industry STX operates in has an average P/E of 16.4. Its P/E ratio went as low as 9.15X and as high as 29.26 over the 5-year span.Further, it is sporting a 0.95 on the Price-to-Sales ratio. Compare this with the industry average P/S of 0.81. 30.7 percent is the gross profit margin for Seagate Technology plc and operating margin sits at 16.3 percent. Along with this, the net profit margin is 12.6 percent.