Seagate Technology Plc, a maker of disk drives, fell to its lowest price in almost three years as Bank of America Merrill Lynch reduced its earnings estimates for the industry amid weaker demand for personal computers.
In its note Friday, Bank of America said demand for PCs, and desktops in particular, continued to flag in the December quarter, with a lack of pickup from enterprise customers. Seagate shares fell 5.8 percent to $32.54 at the close in New York, their lowest value since March 2013, as the broader U.S. equity markets suffered their worst week since 2011. The company plunged 45 percent last year.
Seagate, which competes with Western Digital Corp. in the computer hard-drive market, has suffered from shifts away from personal computers and related components to mobile devices in recent years. The Cupertino, California-based company has tried to diversify products to target the growing corporate markets, but has had inconsistent enterprise demand and execution problems. Seagate’s sales have declined as customers turn to alternatives such as solid state drives or flash-based storage.
“You’ve got a PC market where the sentiment is worsening, and you got the concern that they haven’t fixed their execution issues in the high margin part of the business,” said James Kelleher, an analyst at Argus Research Corp. He rates the stock a buy.
Bank of America, which has a neutral rating on the stock, cut its forecast for Seagate’s earnings per share in the December quarter by 10 cents to 66 cents.