"Hard drive shortage" will continue! Seagate Technology Holdings PLC (STX.US) HDD gross profit margin may exceed 50%, Morgan Stanley raised its bullish target price to $341.

Morgan Stanley reiterated its "overweight" rating on Seagate Technology Holdings PLC (STX.US), with a target price of $270 and a bull market target price of $341. The bank pointed out that due to a strong cycle, Seagate Technology Holdings PLC expects its hard disk drive (HDD) sales to enjoy a gross margin of over 50% in the next 12 months. The analyst team led by Erik Woodring said on Monday, "At the same time, we are also more confident about the risks that may derail this trend by 2026." "When we add up these factors, we believe that revenue growth, profit margins, and earnings per share are all trending towards - if not exceeding - our current bull market forecast, assuming earnings per share of around $17 for fiscal year 2027, while Morgan Stanley currently forecasts $15.40 and the market consensus is $14.67. This provides more support for our bullish target price of $341." Woodring added, "In our meetings, Seagate Technology Holdings PLC's Chief Financial Officer Gianluca Romano explicitly pointed out that HDD demand is growing 'significantly' faster than the 25% annual HDD storage capacity (exabyte) growth driven by Seagate (we estimate it could reach about 40%) - which means that even as the industry certifies new, higher-capacity drives starting in the first half of 2026, HDDs may still be in short supply throughout the entire 2027 calendar year." "However, equally noteworthy in these meetings for us is the quality of HDD demand - which means that we feel that these orders are as close as possible to 'real' demand, rather than risking cycle-disrupting inventory build-up or over-ordering." Morgan Stanley pointed out that apart from Western Digital Corporation (WDC.US), Seagate Technology Holdings PLC has virtually no competitors in the hard disk drive technology sector.