Seagate Technology Holdings PLC, listed on NASDAQ under the ticker STX, saw its stock price surge on Wednesday after announcing its financial results for the second quarter, which exceeded market expectations. The company also provided forward-looking guidance for the third quarter that outpaced analyst projections, lending added optimism to investor sentiment.
For the reported quarter, Seagate registered adjusted earnings per share (EPS) of $3.11, a figure that surpassed the consensus estimate of $2.81 by a significant margin. Revenue generated during the period was $2.82 billion, again beating the predicted $2.73 billion consensus. This outperformance on both the earnings and revenue fronts highlighted operational strength and effective cost management.
From a margin perspective, Seagate achieved a GAAP gross margin of 41.6%, with a slightly higher non-GAAP gross margin recorded at 42.2%. Operational cash flow was robust at $723 million, resulting in free cash flow of $607 million for the quarter. Such cash generation reflects a strong balance sheet and underpins the company’s capital allocation strategies.
Demonstrating a commitment to returning value to shareholders, Seagate declared a quarterly cash dividend of $0.74 per share. The dividend is scheduled to be payable on April 8, 2026, to shareholders recorded as of March 25, 2026. This steady dividend payout underscores the company’s confidence in its cash flow stability.
“Our December quarter results exceeded our expectations on both the top and bottom line, setting new records for gross margin, operating margin, and non-GAAP EPS,” stated Dave Mosley, Seagate’s chair and CEO. His commentary underscores the company’s notable operational achievements during the quarter.
Looking ahead to the third quarter, Seagate provided guidance indicating adjusted EPS in the range of $3.20 to $3.60, notably higher than the consensus forecast of $2.96. Revenue guidance was also positive, with expected sales ranging between $2.80 billion and $3.0 billion, surpassing the projected $2.76 billion. This forward guidance signals management’s confidence in sustained demand and operational execution.
Amid these strong financial metrics and outlook, Rosenblatt increased its stock price target for Seagate from $370 to $500, signaling analyst recognition of the company’s strengthening fundamentals and growth prospects.
On the technical front, Seagate’s stock shows compelling momentum. Currently trading 37.2% above its 20-day simple moving average (SMA) and 66.5% above its 100-day SMA, the stock exhibits considerable strength in both short- and long-term horizons. Over the past twelve months, shares have appreciated 332.67%, positioning them closer to their 52-week highs rather than lows and indicating a sustained upward price trend.
However, several technical indicators suggest a nuanced picture. The relative strength index (RSI) stands at 71.54, traditionally considered to be in overbought territory. This level implies the possibility of a price correction or consolidation in the near term. Conversely, the moving average convergence divergence (MACD) remains above its signal line, indicating prevailing bullish momentum.
This technical combination of an overbought RSI alongside a positive MACD suggests mixed signals. Though the stock demonstrates strong upward pressure, market participants might expect some resistance before further advances can continue.
At the time of the report’s publication, Seagate’s shares were trading 20.27% higher at $447.11. Such a significant intraday gain reflects enthusiastic investor response to the company’s strong quarterly performance and optimistic outlook.
Key Points:
- Seagate reported adjusted EPS of $3.11 and revenue of $2.82 billion for Q2, both exceeding consensus estimates.
- Gross margin reached 41.6% GAAP and 42.2% non-GAAP, with strong operational cash flow generation totaling $723 million.
- Management declared a quarterly dividend of $0.74 per share, payable in April 2026.
- Third-quarter guidance projects adjusted EPS between $3.20 to $3.60 and revenue between $2.80 billion and $3.0 billion, outperforming analyst consensus.
Risks and Uncertainties:
- The stock's RSI indicates an overbought condition, which may lead to short-term price corrections despite bullish momentum shown by MACD.
- Future performance depends on the company meeting or exceeding elevated guidance; any deviations could impact investor confidence.
- Operational margins and cash flow stability may fluctuate depending on market demand and cost pressures.
- Dividend payments, while currently declared, remain subject to the company’s ongoing financial health and capital allocation priorities.