UBS Raises Price Target on NetApp (NTAP) to $32; Reiterates Sell
UBS reiterated a Sell rating on NetApp (NASDAQ: NTAP), and raised the price target to $32.00 (from $30.00), following the company's 2Q earnings report. NTAP reported product revenue of $710mn, below consensus of $722mn.
Analyst Steven Milunovich commented, "Product revenue of $710mn was down 13% YoY and below consensus of $722mn, but the operating margin of 15.2% was 160bps better than consensus of 13.6%. The margin upside was driven by (1) a 60bps higher gross margin of 62.7%, and (2) 100bps from lower opex, though cutting R&D 5% more than we expected is a concern. The $0.06 beat shows costs are well controlled, but we remain concerned about secular storage pressures that may result in future disappointments."
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Shares of NetApp closed at $34.73 yesterday.