What Happened:

Shares of data storage manufacturer Seagate (NASDAQ:STX) jumped 9.9% in the afternoon session after Morgan Stanley analyst upgraded the stock's rating from Equal Weight (Neutral) to Overweight Buy) and raised the price target from $73 to $115. The new price target implied a potential 20% upside from where shares traded when the upgrade was announced. The analyst added, "Our bottom-up analysis indicates that STX's long-term [gross margin] range could be 32-35% (vs. mgmt's 30-33% target), and we are 200-300bps ahead of Street GMs in FY25/26...We also believe Gen AI will be a longer-term 'rising tides lifts all boats' tailwind for storage, causing us to raise our FY26-27 HDD exabyte forecast by 4%."

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What is the market telling us:

Seagate Technology's shares are somewhat volatile and over the last year have had 6 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 7 months ago, when the company dropped 6% on the news that Barclays analyst Tom O'Malley downgraded the stock's rating from Overweight (Buy) to Equal Weight (Hold) and assigned a price target of $65. The analyst added, "The Nearline recovery continues to take longer than expected, with [the first-quarter of 2024] now our best case scenario for a material unit uptick,"

Seagate Technology is up 15.2% since the beginning of the year, and at $95.17 per share it is trading close to its 52-week high of $98.63 from March 2024. Investors who bought $1,000 worth of Seagate Technology's shares 5 years ago would now be looking at an investment worth $2,017.

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