Seagate Technology posted earnings and revenue beats on Friday, but shares slipped into negative territory during trading on the extent of the declines, compared to the same period a year ago.
Just before Wall Street opened, Seagate posted $200 net income ($0.74 per share) for the three-month period to 4th October, which was a sharp drop from the $450m recorded in late 2018.
Group revenues also fell 13.77% from $2.99bn to $2.58bn, but that figure was still enough to beat the consensus estimate of $2.57bn. The $1.03 non-GAAP EPS also trumped forecasts by four cents.
The year-over-year slump is a concern for analysts though, and Morningstar’s Seth Sherwood believes Seagate is now overvalued and offered a fair value target of $42.
He noted: “Seagate Technology is one of two leaders in the hard disk drive market. However, as the storage industry has been transitioning to solid-state drives, that leadership has provided less benefit… We do not believe the firm has an economic moat.”
CEO Dave Mosley offered a more upbeat assessment in a statement after pointing to a quarter-over-quarter improvement in non-GAAP EPS and an expanded non-GAAP operating income as evidence of its “solid start” to FY2020.
He also said better demand conditions for larger capacity storage helped to push exabyte shipments near record highs in the first quarter and that shipments for 16TB drives have already been scaled up to satiate customer demand.
Global business conditions were a headwind for the data storage company in Q1, but Mosely believes its tech roadmap will keep Seagate on the straight and narrow in the short to medium term.
The Cupertino-based company had made stock gains of 49% for the year-to-date, but that advance was checked slightly by a 1.02% decline on Friday. Shares were changing hands for $57.44.
Oil giants Chevron Corp and Exxon Mobil also reported on Friday.
Exxon delivered strong Q3 earnings ($0.75 per share) and net revenue ($65.05bn), but overall profits slumped 50% as the US-China trade battle and its impact on global oil prices made for a challenging three month period to 30th September.
CEO Darren Woods said the company is progressing well in its enaction of a long term growth strategy and investors appeared to be happy with the report overall as shares eased 1.7% higher — a move that pushes the company’s stock back into the black for the year.
Chevron also saw its Q3 earnings and revenue fall 6.6% and 18% respectively from a year ago, but it also missed the Wall Street consensus on both counts.
CVX shares fell 1.2% to $115.06 on Friday, but stock is still up 5.7% since 1st January.