William Blair Says NetApp (NTAP) Getting Less Worse, But Still has Ways to Go
- Oil edges up ahead of U.S. data, OPEC squabbles cap gains
- DuPont (DD) Tops Q3 EPS by 14c; Boosts FY16 EPS Outlook; Says Continuing to Work with Regulators
- Visa (V) Tops Q4 EPS by 5c
- Rambus (RMBS) Tops Q3 EPS by 3c; Issues Q4 Outlook
- After-Hours Stock Movers 10/24: (SAEX) (CWEI) (RMBS) Higher; (SONC) (WNC) (EFII) Lower (more...)
Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.
William Blair affirms NetApp (Nasdaq: NTAP) with an Underperform rating following Q2 results issued Wednesday night.
Analyst Jason Alder commented today,
NetApp topped consensus on the top and bottom lines by $33.6 million and $0.10, respectively, and guided the fiscal second quarter roughly in line with consensus, despite a constrained macro and IT spending environment. Management highlighted progress in the business's transformation, as strategic products (mostly Clustered Data ONTAP and all-flash arrays) contributed to 61% of product revenue (same as a quarter ago) and grew 24% year-over-year, while the mature portfolio (mostly OEM and ONTAP 7) declined 24% (versus a 40% decline in the previous quarter). Overall product revenue was roughly flat year-over-year—the best performance in 12 quarters—though this was against a very easy comparison and guidance for next quarter implies a double-digit year-over-year decline in product sales. Looking ahead, management expects strategic products to drive moderate revenue growth in fiscal 2018 (as mature solutions become less of a headwind), though we continue to model a moderate revenue decline. While NetApp is managing expenses well, product gross margin continues to be challenged, and we see significant execution risks ahead as competition intensifies in all-flash storage, and as cloud-based and hyperconverged alternatives encroach on the traditional storage market. We would need to see more evidence of product revenue growth together with stability in product gross margin before revisiting our rating.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Oppenheimer Raises Price Target on Microsoft (MSFT) to $65 Following 1Q Beat
- Jefferies Raises Price Target on FMC Technologies (FTI) After Adjusting Estimates
- FBR Capital Upgrades Access National Corp. (ANCX) to Outperform Following Middleburg Financial Deal
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View
Related EntitiesWilliam Blair
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!