Update on STX into tonight’s report

I’m getting a lot of questions about Seagate heading into its earnings report tonight too.  Here’s my answer:

Feet to fire, I’d guess STX blows away the estimates on top and bottom lines. No idea if that is already priced in though and the idea that the stock could sell off tomorrow no matter what they report concerns me. I’m holding my STX calls, which have doubled in price so far, steady and will take on the quarterly report tonight as is. The stock’s been steadily rising 2-3% per day for weeks on end now and while it’s WILDLY cheap, trading at less than six times this QUARTER’s earnings, the stock could pull back 10% tomorrow and still BE UP HUGE from its recent lows.

I’m holding the calls mostly because the company’s the only hard drive manufacturer that has any ability to meet demand since most of the hard drive factories have been knocked offline by hurricanes and tsunamis and what not last year and the stock is just too cheap to sell. We’ll see how the market passes judgement tomorrow — it’s the final and only arbiter.