Seagate: Amtech Raises to “Neutral,” Sees Drive Production Cuts

American Technology Research analyst Dinesh Moorjani this morning raised his rating on shares of top disk-drive maker Seagate Technology ( STX ) from “Hold” to “Neutral” based on his impression that production cuts by Seagate and competitors will lead to a “rationalization” of disk drive prices early this year. Signs of diminished production, he writes, include the fact that Seagate has lowered its capex plan for the current year from $1 billion to $750 million recently, while second place manufacturer Western Digital ( WDC ) cut its capex plan to $500 million from $750 million in mid-December. Both firms have stopped plants for several weeks in December, he notes, and Western has been cutting its workforce. At the same time, the stock is down 13% since Seagate’s last earnings warning, on Dec. 10, versus the 2% decline in the Nasdaq, which means that the stock has had about as much underpormance as it’s going to have, in Moorjani’s opinion. But despite the fact that he thinks Seagate will take ... (link)