Is Seagate (STX) Stock a Buy Before Earnings Tuesday?

TLDR

• Seagate reports earnings Tuesday, with analysts expecting EPS of $5.10 and revenue of $3.5 billion
• Wedbush raised its price target on STX to $1,000 from $825, maintaining an Overweight rating
• STX is down 11% in July after a 6% drop on Friday, but bounced 2.5% to $872.53 in Monday premarket trading
• Long-term agreements with cloud hyperscalers at higher prices are expected to kick in later in 2026
• Wedbush also raised its Western Digital (WDC) price target to $650 from $540 ahead of WDC’s August 5 earnings

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Seagate Technology (STX) stock bounced 2.5% to $872.53 in Monday premarket trading after a rough week. The hard-disk drive maker reports earnings after the close on Tuesday, July 28.

Seagate Technology Holdings plc, STX

The stock has surged more than 450% over the past 12 months, making it one of the bigger winners of the AI rally. But July has been tough. STX is down 11% this month, including a 6% drop on Friday alone. That would be its worst monthly performance since March 2025.

Seagate closed Friday just above its 50-day moving average.

Wedbush analyst Matt Bryson reiterated his Overweight rating on Monday and lifted his price target to $1,000 from $825. He expects Seagate to beat consensus estimates, driven by slight price increases and a better product mix.

“We expect slight price increases combined with improved mix should allow Seagate to again exceed forecast results,” Bryson wrote.

The Wall Street consensus, per FactSet, calls for earnings of $5.10 per share, up 96% year over year, with revenue of $3.5 billion, up 43%.

HDD Demand Stays Strong

Bryson noted that demand and supply constraints in the hard-disk drive market are expected to continue well into 2027. Cloud hyperscalers are driving that demand, using HDDs to store the massive datasets needed for AI model training.

Seagate and Western Digital dominate the HDD market and have both become key beneficiaries of AI infrastructure spending.

One factor to watch: existing long-term agreements between HDD makers and hyperscalers could cap some near-term upside. However, a new set of agreements is expected to kick in later in 2026 at higher average selling prices, which Bryson sees as a tailwind through 2027.

Western Digital Also in Focus

Wedbush also raised its price target on Western Digital to $650 from $540, with Bryson maintaining an Overweight rating there too.

“We anticipate WDC should report upside to consensus, with seemingly more room for a beat given a more conservative gross margin guide,” Bryson wrote.

Western Digital reports on August 5. Consensus estimates put WDC earnings at $3.30 per share on $3.7 billion in revenue for the quarter.

STX, WDC, Micron (MU), and Sandisk (SNDK) often trade together and are all lower for the month of July.

Seagate carries an IBD Composite Rating of 87 out of 99, placing it seventh in the Computer-Hardware/Peripherals industry group.

The consensus EPS estimate for Seagate’s fiscal fourth quarter stands at $5.08 per share on revenue of $3.49 billion, according to analyst forecasts tracked by Seeking Alpha.