Seagate Stock Primed for Fresh Highs Ahead of Earnings

STX has added over 91% in the past 12 months

Deputy Editor
Jan 12, 2022 at 2:27 PM
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Seagate Technology Holdings (NASDAQ:STX) launched itself into the new year, nabbing a record high of $117.67 on Jan. 5. While the stock felt the tug of the broad-market pullback late last week, there's evidence that STX could be well on its way to exploring even more uncharted territory in 2022.

This is because the equity just came within one standard deviation of its 40-day moving average after a lengthy period above the trendline. Similar instances within the past three years have had bullish implications, according to data from Schaeffer's Senior Quantitative Analyst Rocky White. In fact, STX has seen nine of these instances during this time period. After 78% of these pullbacks, the stock saw positive one-month returns, averaging a 6.6% pop. A comparable move from its current perch would put STX at a fresh high just above the $120 mark. 

stx jan 12

Despite an impressive year-over-year lead of 91%, some analysts are still hesitant, which could lead to a round of upgrades. Of the 17 in coverage, seven consider STX a "hold." Plus, the 12-month consensus price target of $105.95 is a 6.2% discount to current levels. 

This shift could be imminent, especially considering Seagate Technology has its fiscal second-quarter earnings report due out next week on Monday, Jan. 17. While the equity has tended to drop following reports over the past two years, it turned in a next-day return of 6.1% after its last report in October. Regardless of direction, STX averaged a post-earnings swing of 5.4%. 

Options traders have also taken a bearish stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), STX sports a 10-day put/call volume ratio of 1.72, which stands higher than 91% of readings from the past year. In other words, long puts have rarely been more popular in the past year. 

Short sellers, meanwhile, have already been hitting the exits, but it seems there's still some pessimism to be unwound. Short interest dropped 18.7% in the last two reporting periods, and now the 9.97 million shares sold short make up 4.5% of the stock's available float, or nearly a week's worth of pent-up buying power at its average daily pace of  trading. 

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