Mark Miller Sees Cloud Storage Upside for Seagate Technology (STX)

February 13, 2013

The switch to portable computing will drive consumers to cloud storage solutions. According to “Best on the Street” equity analyst Mark Miller, cloud storage “is estimated to provide 25% of storage now, [and] is forecast to provide up to 60% of all storage by 2020.”

The greater use of video by mobile device consumers implies a ‘back to the future’ upside for industry stalwarts such as Seagate Technology (STX) as hard drives are no longer bundled into personal computing devices but instead become the mainstays of data center storage.

“We project that by the end of this decade you’ll still see 75% to 85% of all storage on hard drives. The reason for that is the lower cost of storage on hard drives,” Miller said in a recent interview. “Seagate reported shipments of nearline drives, which are used for cloud infrastructure, sequentially grew 23% last quarter.”

The high dividend rate and low relative p/e of Seagate also contribute to Miller’s bullish call on the stock, but its primarily the high-margin storage drive business that reinforces this award-winning stock pickers’ investment thesis: “Seagate has about 55% share of the enterprise drive market. Margins of these drives are double or more than the margins of drives in a laptop PC.”