Cowen & Co Starts NetApp (NTAP) at Neutral
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Cowen & Co. initiates coverage on NetApp (Nasdaq: NTAP) with a Neutral rating, saying estimates appear too aggressive given current macro conditions.
The firm issues FY09 EPS estimates of $1.32, below the consensus of $1.40, and FY10 EPS of $1.63, below the consensus of $1.70.
The firm said, "NetApp remains one of the top storage providers, with solid products and good market positioning. FY08 was tough as an unexpected slowdown in rev growth was due to customer/geographic concentration, slowing market, lack of CIO recognition. To counter this NTAP is accelerating sales hiring to broaden the account base and deploying a major advertising campaign to improve CIO awareness. In a normal environment, this is the right strategy. But the combination of ramping op ex, along with the possibility of lower levels of sales productivity, could put a squeeze on margins."
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