What happened

Shares of Seagate Technology (NASDAQ:STX) fell 11.6% in September 2018, according to data from S&P Global Market Intelligence. You can pin that damage on a single analyst downgrade.

So what

In early September, analyst firm Evercore ISI cut its rating on the hard drive and storage systems maker from "hold" to "sell," slashing ITS price target from $55 to $45 per share. Seagate's stock closed 8% lower that day and never recovered.

Close-up shot of a traditional hard drive with the top cover removed. A screwdriver is scratching the visible platter's magnetic layer.

Image source: Getty Images.

Now what

Evercore's grumpy review of Seagate centered around a storage market that had grown "complacent" about NAND memory prices. If those chips, which Seagate and rivals use in their solid-state storage devices, keep getting cheaper, they could undercut the value seen in older but cheaper hard drive technologies. That would be bad news for Seagate, whose magnetic disc solutions would lose market share to more price-competitive solid-state alternatives.

This is not a new idea, and NAND memory prices may not keep plunging as deeply or as quickly as Evercore expects, but the solid-state challenge is exactly why I don't own any Seagate shares. There could be more pain ahead if Evercore's predictions turn out to be on target.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.