UPDATE: Susquehanna Upgrades NetApp (NTAP) to Positive

August 18, 2016 7:54 AM EDT
Get Alerts NTAP Hot Sheet
Price: $36.37 +1.51%

Rating Summary:
    10 Buy, 35 Hold, 11 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
Trade NTAP Now!
Join SI Premium – FREE

News and research before you hear about it on CNBC and others. Claim your 2-week free trial to StreetInsider Premium here.
(Updated - August 18, 2016 8:19 AM EDT)

Susquehanna upgraded NetApp (NASDAQ: NTAP) from Neutral to Positive with a price target of $36 (from $25). Analyst Mehdi Hosseini said, following the release of Q1 results and guidance, he has confidence its ability to deliver FY18 revenue growth.

The analyst explained, "As we noted in our 8/16 preview, we outlined a case where we could get constructive if we saw sustained traction of NTAP's All-Flash Strategy, and Clustered ONTAP (cDOT) penetration - and the Jul Q results and call gave us what we needed. Specifically, our upgrade is predicated on: 1) increased conviction in NTAP's ability to deliver FY18 Revenue growth - driven by reasonable growth and market share assumptions for NTAP's All Flash portfolio (FY17-FY18 CAGR of ~90%), as well as conservative assumptions behind cDOT penetration (FY17-FY18 CAGR of -3%), 2) our belief that NTAP possesses additional room for Opex reductions - which in the context of FY18 Rev growth, leads to operating leverage, 3) based on Rev growth and Opex control, we model FY18 EPS of $2.90, which implies material upside to Consensus of $2.44 - even with a modest Y/Y decline in FY18 Gross Margins given the competitive pricing environment."

Hossein added, "Moreover, we contend that NTAP's sizable installed base and attractive valuation can be enticing for a large global player - such as Cisco - that may be interested in solidifying its converged solution offering (especially given the Dell/EMC merger, and HPE's focus on converged solutions), while also possessing an attractive All-Flash portfolio."

For an analyst ratings summary and ratings history on NetApp click here. For more ratings news on NetApp click here.

Shares of NetApp closed at $28.85 yesterday.

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, Analyst EPS View, Analyst PT Change, Upgrades

Related Entities

Susquehanna International Group of Companies, Definitive Agreement

Add Your Comment