Seagate Off; Barclays Downgrades; Cites Soft Notebook Demand
AUGUST 10, 2010, 12:17 PM ET - By Eric Savitz
Seagate (STX) shares are down sharply this morning after Barclays Capital analyst Ben Reitzes cut his rating on the stock to Equal Weight from Overweight, cutting his target on the stock to $14 from $18. “Several factors could keep shares range-bound, even at these lower levels - including weaker notebook PC demand, competition from Hitachi and threats from tablets,” he writes in a research note. “While we should have made this move much earlier in the summer, we believe gross margins could still have further downside” into the end of calendar 2010.
Reitzes reports that his checks “continue to indicate weaker than expected notebook builds and production cuts at HDD makers.”
For the June 2011 fiscal year, he now sees profits of $2 a share, down from $2.52, with revenue of $11.3 billion, down from $11.85 billion. For FY 2012, his profit forecast goes to $2.35 a share, down from $3.
Meanwhile, Reitzes repeated his Equal Weight rating on Western Digital (WDC), while cutting his target to $29, from $32; he cuts his EPS forecast for the June 2011 fiscal year to $3.70, from $3.95; for FY 2012, he goes to $4.20, from $4.60.
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