Cantor Fitzgerald Downgrades NetApp (NTAP) to Hold; Secular Challenge and Execution Issues

Cantor Fitzgerald downgraded NetApp (NASDAQ: NTAP) from Buy to Hold with a price target of $35.00 (from $43.00) following weak Q4 and outlook. The firm cited transition and execution issues and secular challenges.

Analyst Brian White commented, "Last night, NetApp reported weak 4Q:FY15 results and a 1Q:FY16 outlook that has given us incremental concerns, thus we are downgrading our rating to HOLD from BUY. NetApp reported 4Q:FY15 results that fell short of our estimates (and the consensus) and the company's 1Q:FY16 outlook is well below our projections. Not only is the storage market undergoing secular challenges but NetApp is experiencing its own execution issues with the transition of customers to Clustered ONTAP. We believe the combination of secular challenges and execution/transition issues leaves NetApp vulnerable to customer retention issues and market share losses in a very competitive storage market. As such, we are downgrading our rating on the stock to HOLD from BUY, lowering our estimates, and cutting our PT to $35.00 (from $43.00)."

For 1Q:FY16, the firm is trimming revenue forecast to $1.35 billion from $1.42 billion and cutting pro forma EPS estimate to $0.24 from $0.53. For FY:16, they are lowering pro forma EPS to $1.97 from $2.55.

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 $35.33 yesterday.

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