Seagate (STX) shares soared 12.4% in the last trading session to close at $97.97. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.1% gain over the past four weeks.

The increase in share price can be attributed to the optimism surrounding an anticipated increase in demand for disc drives. This uptick is triggered by a new cryptocurrency, called Chia, that is based on hard drive storage rather than graphics processing units (GPUs), as revealed by Morgan Stanley analyst Joseph Moore in a research note.

Besides, Seagate is benefitting from solid demand for 16 terabyte (TB) products along with 18 TB drives. The company expects recovery in enterprise markets to gather pace in 2021, which augurs well for its nearline and mission-critical drives.

Further, rebound in video and image applications’ market as well as higher sale of consumer drives and uptick in PC shipments augur well. Seagate also expects increase in uptake of its mass capacity storage solutions in the cloud and edge computing verticals.

Price and Consensus

This electronic storage maker is expected to post quarterly earnings of $1.62 per share in its upcoming report, which represents a year-over-year change of +35%. Revenues are expected to be $2.86 billion, up 13.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Seagate, the consensus EPS estimate for the quarter has been revised 1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on STX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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