Shares of Seagate (STX) bounced Monday after a positive mention by Barron's, with the publication arguing that the company's rich dividend yield looks safe and noting that the decline in consumer PC trends does not spell an end to data storage itself.

STORAGE MARKET NOT DEAD: Alexander Eule of Barron's argued this weekend that shares of Seagate could rise to $38 or higher within a year, potentially offering a total return of 20% or more when factoring in the company's rich 7%-plus dividend yield. Eule conceded that both Seagate and rival hard drive maker Western Digital (WDC) have sold off on worries over a declining PC market and the shift to cloud computing, but highlighted that cloud still requires physical storage, just at a separate location.

Citing Point View portfolio manager John Petrides, the publication contended that "flash drives, while faster, can't provide the scale or economics of hard drives," and trends in Big Data analytics will only continue generating demand for storage. Barron's noted that the two companies have taken divergent paths in responding to the changing PC landscape -- Western Digital by acquiring flash memory specialist SanDisk (SNDK) and Seagate by essentially doubling down on traditional hard drives -- with Eule arguing that Western's strategy "could take time" to pay off. On the other hand, Seagate investors "should benefit much sooner" given its outsize, safe dividend as well as "still-ample" earnings and cost cutting commitment.

DIVIDEND AT RISK: Taking a more tepid view, Cowen analyst Karl Ackerman initiated coverage of both Seagate and Western Digital with Market Perform ratings and respective price targets of $36 and $46. Ackerman argued that, while Seagate's cost cutting measures should enable it to at least temporarily weather the PC downturn, its commitment to heavy capital returns now limits future acquisition opportunities and puts the dividend at risk in just a few years given continued market challenges and the company's lack of a meaningful solid-state drive product.

On the other hand, the analyst said that Western Digital is arguably the best operator in hard drives, but he remains cautious in the near-term ahead of the SanDisk merger closure and integration. Longer term, however, Western's joint venture in China and opportunities with Toshiba (TOSBF, TOSYY) should drive growth, the analyst said.

PRICE ACTION: Seagate shares have advanced 6.4% to $35.36 Monday afternoon, while Western Digital is up nearly 4%.