Earnings Update: Here's Why Analysts Just Lifted Their Seagate Technology Holdings plc (NASDAQ:STX) Price Target To US$86.37

Investors in Seagate Technology Holdings plc (NASDAQ:STX) had a good week, as its shares rose 8.4% to close at US$90.99 following the release of its second-quarter results. Revenues of US$1.6b arrived in line with expectations, although statutory losses per share were US$0.09, an impressive 79% smaller than what broker models predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Seagate Technology Holdings

Following last week's earnings report, Seagate Technology Holdings' 21 analysts are forecasting 2024 revenues to be US$6.50b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 76% to US$0.85. Before this earnings announcement, the analysts had been modelling revenues of US$6.41b and losses of US$1.25 per share in 2024. Although the revenue estimates have not really changed Seagate Technology Holdings'future looks a little different to the past, with a considerable decrease in the loss per share forecasts in particular.

These new estimates led to the consensus price target rising 16% to US$86.37, with lower forecast losses suggesting things could be looking up for Seagate Technology Holdings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Seagate Technology Holdings analyst has a price target of US$115 per share, while the most pessimistic values it at US$50.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. From these estimates it looks as though the analysts expect the years of declining revenue to come to an end, given the flat forecast out to 2024. That would be a definite improvement, given that the past five years have seen revenue shrink 5.6% annually. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 5.0% annually. So it's pretty clear that, although revenues are improving, Seagate Technology Holdings is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Seagate Technology Holdings analysts - going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Seagate Technology Holdings has 3 warning signs we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.