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STX – Market expectations are for Uniform ROA to fade, management may also have concerns about profitability, macro uncertainty, and storage capacity
April 12, 2022
Seagate Technology Holdings plc (STX) currently trades below corporate but around historical averages relative to Uniform earnings, with a 15.5x Uniform P/E (Fwd. V/E’).
At these levels, markets are pricing in expectations for Uniform ROA to fade to 8%, accompanied by 3% Uniform asset growth.
Meanwhile, analysts expect Uniform ROA to improve to 11% in 2023, accompanied by immaterial Uniform asset shrinkage.
If sustained going forward, these levels would imply a stock price closer to $136.18, representing approximately 49.05% equity upside for the firm.
That said, the firm’s most recent earnings call suggests management may have concerns about profitability, macro uncertainty, and storage capacity.
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