Seagate Technology (STX): Management Meetings Highlight the Disconnect Between Strong Fundamentals and Weak Sentiment

Following a three-day roadshow with Seagate CFO Gianluca Romano and Head of IR Shanye Hudson, Morgan Stanley gains more conviction in its Overweight thesis. STX shares are down 43% over three months and 59% off 52-week highs, while FY27 and FY28 EPS estimates have moved 25% to 50% higher, leaving shares at 5.2x CY28 EPS of 89.21 dollars and 3.4x the bull-case CY28 EPS, below historical trough multiples for HDDs. Management sees no signs of HDD industry irrationality, with unit capacity disciplined and supply growth driven by areal density gains. Component inflation slows cost-downs, but stronger pricing should offset cost pressure and sustain margin expansion. HAMR remains on track with no technical qualification issues, and rising HAMR mix supports roughly 25% EB CAGR without adding HDD units. FCF is growing each quarter, and STX should be able to buy back about 30% of the company in the next 2 to 2.5 years. The team acknowledges broader AI and data center concerns, but believes funda