Close

NetApp (NTAP) Cash Flow Decline Highlights Challenges - BMO

November 19, 2015 8:09 AM EST
Get Alerts NTAP Hot Sheet
Price: $104.97 -0.24%

Rating Summary:
    20 Buy, 29 Hold, 6 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
Join SI Premium – FREE

Keith Bachman, BMO Hardware and Services analyst, cut his FCF estimates for NetApp (NASDAQ: NTAP) . Although revenue and earnings looked good for the current quarter, FCF of $99 million in the October quarter compares with $330 million generated in year-earlier period and the outlook for revenue and earnings is deteriorating.

The weak cash flow was driven by lower profitability and working capital, including DSOs and DPOs.

For FY16, management guided total revenue to decline just over 5%, which BMO thinks optimistic. He assumes total revenue declines about 6% in FY16 and 1% in FY17.

Bachman thinks that buyers of IT are moving more toward the cloud, and storage will hold less value in the future. To bring incremental value to customers, we think NTAP will either have to increase R&D or buy IP and is not an acquisition target.

The firm is raising FY16 EPS estimate to $2.39 from $2.36, driven by opex cuts but maintained a Market Perform rating and lowered its price target to $35.00 (from $36.00).

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 $31.04 yesterday.



Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Analyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change

Related Entities

Earnings, Definitive Agreement