William Blair Says NetApp (NTAP) Getting Less Worse, But Still has Ways to Go
- Record-setting rally pushes on as S&P ends week up 3 percent
- Trump's Cohn Pick Most Bullish Sign Yet for Banks - Cowen
- Unusual 11 Mid-Day Movers: (IDXG) (INVN) (EBS) Higher; (SCON) (DTEA) (DLTH) Lower (more...)
- 21st Century Fox (FOXA) offers to acquire Sky for GBP10.75/share
- Coca Cola (KO) Announces James Quincey to Succeed Muhtar Kent as CEO; Kent to Continue as Chairman
Get inside Wall Street with StreetInsider Premium. Claim your 2-week 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
- Pivotal Research Upgrades Flowers Foods (FLO) to Hold
- Jefferies Raises Price Target on Broadcom Ltd. (AVGO) to $210 Following 4Q
- BMO Capital Remains Bullish on Duluth Holdings Inc. (DLTH) Following 3Q Report
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!