Oppenheimer Sticks to Its Hold Rating for NetApp

By Ryan Adsit

Oppenheimer analyst Ittai Kidron maintained a Hold rating on NetApp (NASDAQ: NTAP) today. The company’s shares closed yesterday at $60.64, close to its 52-week high of $64.06.

Kidron said:

“NetApp delivered another solid quarter, driven by broad regional demand and strong strategic product/operational execution. Positives include ongoing strategic product traction ($647M, +26% YoY), more AFA share gains ($2.0B annualized run-rate, up ~50% YoY), and mature product stabilization (flattish YoY rev.). However, gross margin (62.6% vs. 63.1% Street estimate) showed more pressure than expected. With guidance reflecting flattish gross margin trends and largely in-line sales/earnings, we expect the shares to be weak near-term. We’d look to the upcoming April 5th Analyst Day as an opportunity to quickly rebuild confidence as more color on cloud opportunities, margins and taxes updates, and capital allocation plans are shared. Maintain Perform with a positive bias.”

According to TipRanks.com, Kidron is a 5-star analyst with an average return of 14.5% and a 60.2% success rate. Kidron covers the Consumer Goods sector, focusing on stocks such as Hewlett Packard Enterprise, Advanced Micro Devices, and Motorola Solutions.

Currently, the analyst consensus on NetApp is Moderate Buy and the average price target is $62.53, representing a 3.1% upside.

In a report issued on February 6, Goldman Sachs also initiated coverage with a Hold rating on the stock with a $64 price target.

Based on NetApp’s latest earnings report for the quarter ending January 31, the company posted quarterly revenue of $1.52 billion and GAAP net loss of $506 million. In comparison, last year the company earned revenue of $1.4 billion and had a net profit of $146 million.

Based on the recent corporate insider activity of 68 insiders, corporate insider sentiment is negative on the stock. Last month, Joel Reich, the Exec VP, Product Operations of NTAP sold 6,500 shares for a total of $362,684.

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NetApp, Inc. engages in the provision of software, systems, and services for the management and storage of customer data. The company’s products include hybrid, enterprise all-flash, and cloud storages. Its patented unified scale-out fabric-attached storage platform uses the NetApp Data ONTAP storage operating system.