Seagate Technology [STX]
Spot $764.20 (Alpaca last trade, 2026-07-29). No position verdict — the book decides.
Equity is the default and needs no argument. It is nonetheless the correct vehicle here, and the reason is measurable:
| Value | |
|---|---|
| Trailing 252-day realised volatility | 70.8% |
| Trailing 60-day realised volatility | 81.5% |
| Drawdown from 252-day peak close ($1,093.26, 2026-06-22) | −30.1% |
A LEAP requires measured IV minus trailing 252-day realised vol to be favourable. With realised vol at 70.8% and rising to 81.5% over 60 days, option premium on this name is expensive in absolute terms and any long-premium structure needs a large directional move simply to clear theta. No options chain was priced in this run (time-boxed), so no IV−RV measurement exists and therefore no options structure is admissible. Stated as absent rather than asserted.
Anything shorter than the thesis horizon would require a catalyst preceding expiry. The thesis horizon is 12 months (to the FY2027 earnings path) and the binding catalysts — Mozaic 4 qualification at the remaining CSPs, the CY2028 LTA/BTO renewal cycle — sit inside and beyond it respectively.
Vehicle: common equity. No derivative overlay recommended without an IV−RV measurement.
| Level | Price | Basis |
|---|---|---|
| 252-day peak close | $1,093.26 | 2026-06-22 |
| Bull target | $1,075 | 30x FY2028E EPS $35.80 |
| Base 12-month target | $860 | 24x FY2028E EPS $35.80 (+12.5%) |
| Spot | $764.20 | 2026-07-29 |
| Price at which the 5-year implied path clears at management's own 20% growth target | ~$400 | 12.6x warranted exit, 35% terminal margin, 20% CAGR |
| Bear target | $430 | 12x FY2028E EPS |
| Downside case (named cause: CY2028 LTA renewal at flat $/TB) | $267 | −65% |
The critical number is ~$400. That is where today's price stops requiring a terminal multiple above the warranted one. At $764 the position is a bet on multiple persistence; at ~$400 it would be a bet on the business only.
Realised vol of 70.8% (60-day 81.5%) with a −30.1% live drawdown, on a name whose entire five-year
required path fails by 14.8pp against management's own growth target, argues for sizing governed by
volatility and by evidence grade rather than by conviction in the mechanism. Evidence grade: A on
mechanism and accounting quality; C on the multiple (anchor UNIDENTIFIED). Per valuation.md rule 5,
that uncertainty reduces position size, not the operating assumption — the terminal margin stays at
35.0%.
Correlation warning for the book: STX, WDC, MU and SNDK share one driver (hyperscaler AI capex) and moved together today (MU −12.8%, SNDK −9.5%). They are one exposure, not four. Any cluster limit must treat them as a single line.
Exit the thesis, not the price, if any of these appear in a filing or transcript: 1. Revenue per exabyte turns negative y/y for two consecutive quarters while exabyte growth continues. 2. Any of the three HDD suppliers announces unit-capacity (not areal-density) investment. 3. Nearline capacity ceases to be described as allocated more than two quarters forward. 4. Mozaic 4 qualification at the remaining CSPs slips beyond the September-2026 quarter.