Seagate Technology downgraded as Barclays sees China weakness

Seagate Technology (NASDAQ:) was cut to Equal Weight from Overweight at Barclays on Thursday, with analysts maintaining a $65 price target on the stock.

The analysts told investors in a note that STX’s valuation “is now 27x Street CY24 (30x our number).”

They also noted that during the quarter for US semiconductor stocks, Toshiba (TYO:) was the share gainer, up to 12% from 10%, which came at the expense of STX.

“We move September revenue to the low end of guidance ($1.48B vs. our prior $1.56B) as Legacy is weaker than anticipated due to overall weakness across all segments (ex-VIA) in China,” said the analysts.

“We also bring GM lower to 19% (vs. our prior 20.7%) as underutilization charges will increase Q/Q into Q3, revenue was adjusted lower, and there will be a decline in mission-critical within legacy, which historically has strong GMs.”