Shares of Seagate Technology (NASDAQ:STX) jumped 7.5% on Monday after Morgan Stanley elevated the company to a top pick and raised its price target to $582 from $468. The move followed a week in which Seagate closed at $429.36 on Friday.
Morgan Stanley analyst Erik Woodring kept an Overweight rating on Seagate while substantially increasing his price objective. The new $582 target implies roughly a 35% upside from the Friday closing level cited by the broker.
Woodring reported that Morgan Stanley’s latest surveys and supply/demand tracking indicate strengthening demand for hard disk drives (HDDs). According to his commentary, the bank’s tracker now signals potential shortages persisting through calendar year 2028.
In addition to tighter supply/demand conditions, Woodring highlighted that pricing per terabyte is running significantly ahead of prior expectations. He said stronger price per TB is expected to lift Seagate’s margins and earnings per share above consensus forecasts, a central element of Morgan Stanley’s rationale for the higher price target.
The analyst’s note also included upward revisions to estimates for both Seagate Technology and Western Digital, based on what Morgan Stanley describes as improving market conditions for HDDs. Those raised estimates reflect the firm’s view that both companies will benefit from the combination of firmer pricing and constrained supply.
Investors reacted positively to the research note, sending Seagate shares higher in early trading on Monday. The broker’s projection of an approximately 35% upside from the prior close was a focal point for market participants following the report.
Context and implications
While the Morgan Stanley note emphasizes near-term supply tightness and better-than-expected pricing, the firm’s outlook centers on how these dynamics translate into improved margin and EPS trajectories for Seagate and, to a degree, Western Digital. The bank’s supply/demand tracker and its expectation of shortages through CY28 underpin its bullish stance.