Brean Capital Maintains a Hold Rating on NetApp (NTAP) Following 6c EPS Beat

Brean Capital maintained a Hold rating on NetApp (NASDAQ: NTAP) following the company's 1Q16 earnings company. NTAP reported revenue of $1.34B, coming in ahead of Street's $1.32B. EPS of $0.29 beat the Street estimate of $0.23. Management expects Oct Q revenue to decline to $1.47B vs. Street's estimation of 1.39B.

Analyst Ananda Baruah commented, "NTAP reported Jul Q revenue of $1.34B vs. Street of $1.32B and EPS of $0.29 vs. Street of $0.23. Revenue declined 10.4% Y/Y (~6.4% adjusted for FX) and 13.3% Q/Q. Product revenues were down 27% sequentially and 25% Y/Y, largely due to the expected decline in ONTAP 7-mode sales. Overall Services revenues including software and hardware maintenance increased 7% sequentially and 11% Y/Y, benefiting from continued growth in installed base and renewals from existing customers. July Q revenues also benefited from an extra week than typical quarters, which added ~$40M to revenues. July Q product GM of 51.2% (vs. Jul Q ’14 of 57.2%) was negatively affected by FX as well as unfavorable volume, product mix, and pricing. Jul Q Services GM was 64.1%, 140bps less from Jul Q ’14, while software GM was relatively flat at 96.0% Y/Y. NTAP delivered better-than-expected Jul Q OM of 7.7% vs. 15.6% in Apr Q and 15.9% in Jul Q ’14. NTAP generated solid CFO and FCF of $129M and $91M from net income of -$30M."

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 $29.78 yesterday.

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