We recently revised our price estimate for Seagate from $45 to $39. The primary reasons for the price estimate revision were lower revenue expectations due to subdued demand for most product streams for Seagate, which will negatively impact the company’s margins and earnings going forward. In its fiscal second quarter earnings call in January, Seagate’s management provided weak FY’16 guidance for revenues as well as margins. For the fiscal third quarter ending March 2016, the company expects revenues to be about 20% lower on a year-over-year basis – a trend consistent with the last couple of quarters.   Similarly, Seagate reported compressed margins over the last couple of quarters owing to price declines and significantly lower demand for PC storage.

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