Seagate Stock's a Steal Before Earnings

STX stock has put in a strong performance in 2019

Seagate Technology PLC (NASDAQ:STX) stock rallied hard off its early August lows near $42, eventually topping out at an annual high of $57.20 on Sept. 18. The shares have since consolidated some of these gains, but are trading near a trendline that's had bullish implications in the past -- suggesting a rally to new highs could be on the short-term horizon for STX.

Specifically, the shares have pulled back near their 30-day moving average, which has served as reliable support over the past three years. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, following the five previous run-ins with this moving average, STX stock averaged a one-month gain of 5.8%, with 80% of those returns positive. From its current perch at $54.95, another move of this magnitude would put the shares above $58 for the first time since July 2018.

Options traders have already been positioning for more STX upside. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 2.58 ranks in the 93rd annual percentile, meaning calls have been bought to open over puts at an unusually quick clip.

Analysts, on the other hand, have been more skeptical of the data storage specialist. Despite Seagate Technology stock's 42.5% year-to-date gain, 14 covering brokerages maintain a "hold" or worse rating, compared to three "buy" or betters. Plus, the average 12-month price target of $50.11 is a nearly 9% discount to the security's current perch. A round of upgrades and/or price-target hikes could create tailwinds for STX.

And even with Seagate Technology earnings due out before the market opens on Friday, Nov. 1, short-term options are still pricing in relatively tame volatility expectations at the moment -- making it an attractive time to buy options premium. This is per the stock's Schaeffer's Volatility Index (SVI) of 38%, which ranks in the 23rd percentile of its 12-month range.