Toshiba's Expansion Plan Slams Hard-Drive Stocks, but One Company Still Has Upside
Seagate Technology (NASDAQ:STX) and Western Digital (NASDAQ:WDC) took a hit on Friday, falling around 13% each. The decline comes after Toshiba announced plans to double its hard-disk-drive production capacity by fiscal 2027, investing ¥60 billion ($380 million). This could challenge the favorable supply conditions enjoyed by Seagate and Western Digital.
Goldman Sachs analyst James Schneider sees a strong case for owning Seagate, citing its potential for outsized earnings growth. He believes that Seagate's heat-assisted magnetic recording (HAMR) technology will give it an edge in the market. Schneider also expects the company to have more room to return capital as it pays down its remaining debt.
Schneider backs his call with a Buy rating and a $960 price target, implying ~17% upside for STX. Seagate carries a Strong Buy consensus rating from Wall Street, with 14 of 16 analysts recommending the stock and an average price target of $1,080.13, indicating about 31% upside.
On the other hand, Schneider gives Western Digital a Hold rating, despite expecting it to benefit from cloud customers accounting for a larger portion of industry demand and disciplined supply from HDD manufacturers. However, he believes that Seagate will gain incremental share over the next year due to its ramp of HAMR drives.