Needham & Company Remains Sidelined on NetApp (NTAP) Following Solid 2Q
Needham & Company reiterated a Hold rating on NetApp (NASDAQ: NTAP) following the company's 2Q earnings report. NTAP reported revenues of $1.34B compared to the street's estimates of $1.35B. Guidance was $1.265-1.415B. EPS was reported at $0.60, ahead of the consensus of $0.54, and guidance of $0.51-0.56.
Analyst Richard Kugele commented, "We believe NTAP execution has improved, as evidenced by its ability to carry the stabilization trends first exhibited earlier in the year into F2Q. These trends include strategic solutions (62% of product rev) +10% seq and mature products up slightly. Installed base conversions to CDOT also continued their gradual migration higher, reaching 36% vs. 32% q/q. However, the upside to EPS was largely driven by lower than implied guidance for operating expenses due to the restructuring. We have adjusted our model to more accurately reflect expenses going forward, but nevertheless we see the stock as fully valued in the $35-40 range (roughly 10x ex-cash for a company that still is topline challenged). We maintain our Hold rating."
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Shares of NetApp closed at $34.73 yesterday.