Broadpoint.AmTech Reiterates a 'Buy' on NetApp (NTAP); Raises PT & Estimates as Positives Outweigh Negatives

November 19, 2009 11:49 AM EST

Broadpoint.AmTech reiterates a 'Buy' on NetApp, Inc. (Nasdaq: NTAP), raises price target to $36 from $34.

Broadpoint analyst says, "In our view, NTAP management continues to exhibit fine stewardship as evidenced by posting an old-school “beat-and-raise” quarter after a solid analyst day last month. Key thoughts as follows:

Positives: 1) Massive upside to pro forma operating margins at 17.0% (up 640bps Q/Q), 2) solid revenue beat by ~$20mil+ ($910mil, up 9% Q/Q and flattish Y/Y vs. our expectations of $887mil and the Street at $882mil), and 3) customers returning to the trough with large deals as high-end units grew 24% Q/Q.
Negatives: 1) Fully diluted share count continues to creep higher (up 17mil over the past 6 months, guided up another 5mil this quarter), 2) poor yield on net cash balance of $1.9bil (a meager ~$4k), and 3) conservative gross margin guidance for January '10 (~64%, down 350bps Q/Q).

Raising CY10 EPS by 2%: We believe NTAP will grow revenue and pro forma EPS by 15% and 33%, respectively in CY10 to $4,128mil and $1.72 (vs. our old estimates of $3,888mil and $1.68 vs. consensus at $3,882mil and $1.52)."

To see all the upgrades/downgrades on shares of NTAP, visit our Analyst Ratings page.

NetApp, Inc. provides enterprise storage and data management software and hardware products and services.

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