Seagate Technology (NASDAQ: STX) dropped to $81.08 in early Wednesday trading, extending its bearish trend and reaching lows that we haven’t seen since mid-April – making Seagate the second-worst performing large-cap stock from the market open.
A key factor in the Seagate stock drop is today’s downgrade from Morgan Stanley – a tag that affects future potential even at the best of times. Morgan Stanley’s Katy Huberty downgraded Seagate from Overweight to Equalweight – cutting the overall price target by 25%, down to $88 from $118.
This has clearly had an impact on investor sentiment in the early hours of today’s trading, with Seagate dropping 4.7% to a current price of $81.25.
In a bit of a double-edged sword, Huberty recognized Seagate’s accelerated growth in the burgeoning of the data storage market and the usage of new-age technologies such as AI & IoT; as well as confirming that the long-term outlook is still bullish.
Katy Huberty explained that…
“However, STX isn't immune to cyclical demand weakness, and we see early signals pointing to moderating cyclical demand into year-end and 2022. The combination of fading cyclical demand, rising channel inventories, and moderating ASP growth, create a more balanced risk-reward going forward.”
Gravitating towards the downgrade and the price cut of 25%, cautious investors sparked a quick sell-off in the early hours of the market open.
Seagate plans to announce their fiscal first quarter 2022 results before the market opens on October 22nd – time will tell how the market reacts to Morgan Stanley’s target of $88.
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