Wells Fargo Upgrades Nimble Storage (NMBL) to Outperform
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(Updated - September 29, 2016 8:08 AM EDT)
Wells Fargo upgraded Nimble Storage (NYSE: NMBL) from Market Perform to Outperform with a price target of $10-$11 (from $9-$10). Analyst Maynard Um said he thinks multiple expansion will be driven by F18 revenue acceleration and improved bottom line leverage.
Um explained, "We upgrade our rating to Outperform, raise our valuation range to $10-$11 (prior $9-$10) and see favorable risk/reward given our view that current valuation of 1.0x EV/Sales our F18 sales discounts growth/leverage we anticipate in F18. We expect growth to be driven by 1) a strong pipeline for its all-flash array in a secularly growing market and 2) our expectations for better performance in its hybrid arrays than the implied decline in our/Street’s F18 forecast. We believe the risk/reward is additionally skewed positively given our view that 1) there is limited near-term risk as we think management may have taken a more conservative approach to guidance given issues last year, 2) gross margins will remain relatively stable, 3) its InfoSight predictive analytic engine offers differentiation, and 4) organizational changes made earlier this year and channel roadshows in Sept should start yielding benefits in the next couple of quarters."
Shares of Nimble Storage closed at $8.11 yesterday.
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