What Seagate Needs to Hit the Next Level
Two straight quarters of EPS beats have given it the street cred it deserves.
Asian stocks were down overnight, but not by much. The Hang Seng and the Nikkei were off 0.3% and 0.03% respectively. European stocks were in negative territory earlier this morning, too. And here in the US, we're currently trading higher.
Here's what I'm focused on this morning:
Seagate Technology (STX):
The disk-drive maker served up some solid first-quarter results. In the period, it put up $0.58 excluding items, which was well ahead of the $0.47 analysts had been looking for. It managed to beat on the top line, too.
1. This makes it two straight quarters of EPS beats, which gives the company some nice Street cred. Another one or two beats could really get the stock up to the next level.
2. I was also particularly drawn to this line in the release: "The company expects revenue to be approximately $2.75-$2.85 billion and gross margin as a percent of revenue to be near the high end of the company's targeted range of 22-26%." That stands out because the estimate is $2.75 billion. My hope is that we may see revenue estimates bump up a bit in the near-term. Note that EPS estimates for the current year and next year have actually gotten a nice goose over the past month or so already.
3. I still feel the same way I did back in late September when I said in Good News for Seagate, But Proceed with Caution, that it would be more fairly valued right now just north of $20.
4. I'd see dips as an opportunity at this point.
Yahoo is bound to garner some eyeballs this morning. The company appropriately called "Bartz's baby" (after chief executive Carol Bartz) was out with its third-quarter numbers last night, and they were pretty decent. It put up $0.13, whereas the Street was at $0.07. At first blush, it appeared its revenue line was in the ballpark of what the Street had been expecting.
I think the bottom-line beat was nice, and I also believe we could be looking at a new 52-week high today. But as I've said before, Bartz and her crew need to find a way to really get that revenue line moving if they want the stock to take off. That said, I'd still rather do a search for Yahoo than Google (GOOG). Stay tuned here because we're still in the early stages of the game.
For my previous take on Yahoo, click here.
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