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A Benchmark analyst downgraded shares of Seagate Technology (NASDAQ:STX) to Hold from Buy after the company lowered its FQ1 forecast.
The storage company cited weaker economic trends in some parts of Asia, but also more cautious behavior on the side of certain U.S. cloud customers.
“We see these trends persisting at least through the end of this year. Also, prolonged economic weakness could lead data centers to reduce their 2023 capital spending. As a result, we have lowered our FY23 forecast and recommendation,” the analyst said in a client note.
Similarly, the analyst cut the rating on Western Digital (NASDAQ:WDC) to Sell from hold after Seagate’s comments. The price target sits at $34 per share.
“We are especially concerned about Seagate’s comments about inventory issues and caution among some of its cloud customers which have implications for Western Digital. Also, continued economic softness could lead data centers to cut their 2023 capital spending plans. As such, we are again lowering our FY23 estimates, reflecting both lower sales and margins,” the analyst wrote in a separate note.
Shares of STX and WDC are both down almost 3% in premarket Thursday.
