Seagate: Transferring Coverage, Raising Fair Value Estimate to $85 From $78

We are transferring our coverage of Seagate after previously transferring coverage of Western Digital following the spinoff of its NAND memory business SanDisk. We are raising our fair value estimate to $85 from $78, largely driven by more positive gross margin assumptions as we become a bit more positive on the benefits of higher structural data storage demand given current artificial intelligence and data center trends, along with a greater belief that the industry could be slightly more disciplined on pricing in the current cycle. With shares trading at $86 as of this writing, we view shares as fairly valued. We retain our no-moat, High Morningstar Uncertainty, and Standard Capital Allocation Ratings for the firm.