Wedbush has raised its price target on Seagate to $1,000 from $825, arguing the hard-drive maker will beat its own forecasts as data-centre storage demand outstrips supply.
Analyst Matt Bryson reiterated an outperform rating ahead of the company's results on Tuesday.
The bank expects Seagate to exceed its guidance for revenue of $3.45 billion and adjusted earnings of $5.00 per share, driven by higher prices and a richer product mix.
Seagate makes the high-capacity hard drives, known as nearline drives, that store vast quantities of data inside cloud computing centres.
Wedbush believes the shortfall against the demand signalled by cloud providers has continued to widen.
The bank estimates drive shipments may fall more than 300 exabytes short of stated customer demand, a gap wide enough to keep pushing prices higher.
Pricing power building
The immediate driver is average selling prices, the typical price a drive fetches.
Bryson expects those to climb about 10% year on year, with further gains as new long-term supply contracts with big customers take effect from the third quarter.
The broker notes that enterprise flash drives are set to sell at more than $0.50 per gigabyte, against roughly $0.015 for hard drives today, leaving ample room for hard-drive prices to rise.
Supply stays tight
Seagate's apparent plan to expand its Rochester facility, which makes the recording heads that read and write data, is the first sign of a meaningful capacity expansion by either of the two market leaders.
Even so, the bank estimates any new drives from that investment would not arrive until late 2028 at the earliest.
That leaves the supply shortage, and the pricing power it confers, intact for some time, with Bryson seeing little risk to the favourable backdrop before 2029.
Wedbush bases its new target on 18 times its forecast earnings for the 2028 financial year.
Seagate shares closed at $851.69, implying upside of about 17% to the new target.
