Seagate loses more ground as UBS downgrades due to multiple issues

Seagate Expertise (NASDAQ:STX) dipped practically 2% on Thursday as UBS analyst Timothy Arcuri downgraded the storage tech chief following its disappointing quarterly outcomes and outlook, and plans to chop 3,000 jobs.

Acuri took down his score on Seagate (STX) to impartial, and lowered his worth goal on the corporate’s inventory to $55 a share from $85 as a consequence of a number of unfavorable components going through the the hard-disk drive maker. Amongst these had been Seagate’s (STX) fiscal first-quarter outcomes and outlook that conspired to drive the corporate’s shares down by greater than 7% on Wednesday.

Seagate (STX) turned in a revenue of 48 cents a share. excluding one-time objects, on income of $2.04B, whereas analysts anticipated Seagate (STX) earnings of 71 cents a share on $2.1B in gross sales. For its fiscal second quarter, the corporate forecast earnings of 15 cents a share, on $1.85B in income, which fell wanting Wall Avenue’s prior estimates for a revenue of 80 cents a share on $2.1B in income.

In an announcement, Seagate (STX) Chief Govt Dave Mosley cited “international financial uncertainties and broad-based buyer stock corrections” that obtained worse within the quarter as among the many causes for the corporate’s poor efficiency and outlook.

Together with its new forecast, Seagate (STX) stated it can shed roughly 3,000 jobs, and stated it was beneath investigation by the U.S. Commerce Division on fees of violating laws associated to illegally promoting onerous drives to an organization that’s beneath U.S. sanctions. Numerous reviews stated the corporate in query was China’s Huawei Applied sciences. Seagate (STX) has denied the allegations.

Arcuri stated the Commerce Division matter “merely creates an excessive amount of potential threat and offsets what’s in any other case a elementary set-up that’s fairly good” for Seagate (STX). Arcuri added that whereas it’s onerous to estimate the result of the Commerce Division inquiry, Seagate (STX) could possibly be slapped with penalties of as a lot as two occasions the worth of the offers.

Seagate (STX) shares at the moment have a consensus purchase score from Wall Avenue analysts, whereas In search of Alpha authors give the corporate’s inventory a maintain score. In search of Alpha’s quant system, which usually outperforms the inventory market, offers Seagate (STX) shares a score of maintain.