NetApp (NTAP): 5 Key Takeaways From The Call - Susquehanna
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Susquehanna analyst, Mehdi Hosseini, reiterated his Positive rating on shares of NetApp (NASDAQ: NTAP) and raised his price target to $46.
Strong margins and an encouraging Jan Q guide support the analyst's "Positive" rating. The thesis revolves around increased conviction in NTAP's ability to deliver FY18 Rev growth and Opex leverage, leading to double digit EPS growth.
1) overall All-Flash Array (AFA) revenue grew >200% Y/Y and continues to fire on all cylinders (>$1B annualized run rate), and has placed NTAP comfortably ahead of PSTG in market share rankings
2) the migration of the installed base to Clustered ONTAP (cDOT) is progressing as expected - which enables NTAP to more effectively monetize its installed base with new products (namely All-Flash systems)
3) Product Gross Margin expansion in the Oct Q was encouraging, and consistent with our belief (and NTAP's prior commentary) that Product GMs likely troughed at 46% in the Jul Q
4) we continue to believe the acquisition of SolidFire could give NTAP what it needs to cultivate a software defined storage offering (i.e. hyper-converged), given SolidFire's core software IP
5) there remains more OM expansion (driven by lower op-ex) to be realized in FY18
The $46 PT increases from $42
Shares of NetApp closed at $34.73 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
Related EntitiesSusquehanna International Group of Companies, Definitive Agreement
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