Analyst Ananda Baruah at Brean Capital maintained a Buy rating for shares of Seagate Technology PLC (NASDAQ:STX), along with a Price Target of $42 for the stock. The analyst in a research note on the company mentioned that the market for video surveillance is a much larger one and is also growing at much steadier pace than expected.

The analyst noted that it was a continued belief that Seagate has the power to report generalized Earnings per Share (EPS) of $4.00-$600. Moreover, what the analyst has learned on the Video Surveillance call earlier yesterday, seconds the Sell-Side’s belief too. In addition, the analyst is of the view that over the course of time, the company has the ability to lower its Cost of Goods Sold (COGS) by around $400-$500 million on annual basis if not greater than this.

Additionally, the Sell-Side’s analyst is of the view that the company has the ability to lower its Operational Expenditure (OPEX) by around $200 million at lowest. It noted that every $100 million of savings in costs result in an increase in EPS by $0.33. The Target Price of $42 for the stock is on the basis of 12x multiple of Sell-Side’s EPS expectation of $3.50 for CY17.

Following the call earlier with Seagate’s Director of Global OEM, Mr. Steve Loh, and Manager of Product Marketing, Mr. Jason Bonoan, the analyst stated that the company characterizes itself as 6%-7% of the overall shipper in the video surveillance market. Moreover, the analyst mentioned that the video surveillance capacity opportunity is expected to increase in future by around three to four times in the upcoming four to five years. Gross margins in video surveillance are currently better than the average by around 200 basis points (bps) and video surveillance has the potential to expand further too, considering better innovation and the future improvement in technology required to meet the ever increasing needs of video surveillance storage.