NetApp (NTAP) Blows Past Q1 and Outlook Estimates, Firms Raise PTs but Say Much of This Strength Already Priced Into Shares
Shares of NetApp (NASDAQ: NTAP) are up almost 2% in pre-market Thursday after the company delivered stronger-than-expected FQ1 results.
NetApp made a profit of $1.15 per share to easily beat the analyst estimate of $0.95 per share. Revenue for the quarter came in at $1.46 billion versus the consensus estimate of $1.43 billion.
“Building on our accelerating momentum through last year, we are off to a great start to fiscal 2022, with strong revenue, gross margin, and operating leverage across the entire business,” said George Kurian, chief executive officer.
“Cloud and digital transformation initiatives remain top customer priorities and our results underscore the value we bring to customers in a hybrid, multi-cloud, data-driven world. With focused execution and demonstrated leadership, we are reshaping the industry. We made a number of innovation announcements this quarter, and we will continue to bring industry-leading capabilities to market, further enhancing our differentiated position in cloud and software.”
As for this quarter, the company forecasts Q2 2022 EPS of $1.14-$1.24, versus the consensus of $1.13. NetApp sees Q2 2022 revenue of $1.49-1.59 billion, versus the consensus of $1.52 billion.
NetApp sees FY2022 EPS between $4.85-$5.05, versus the consensus of $4.59. Net revenues are expected to grow in the range of: 8% to 9%.
Credit Suisse analyst Matthew Cabral says the company remains well-positioned as its Enterprise business picks up steam. The analyst reiterated his “Outperform” rating and raised the price target to $94.00 per share from $90.00.
“NetApp’s results (particularly when taken together with Pure’s Q/comments) underscore improving Enterprise momentum as demand continues to recover following a difficult CY20; we also think All-Flash exposure (>60% of NetApp’s Product mix, per IDC) remains a key driver of outperformance vs. the wider market and expect continued share gains ahead for NetApp. Further, we continue to like their positioning in a hybrid-first world with robust PCS growth a key proof point for their highly differentiated Data Fabric strategy,” Cabral explained in a note sent to clients.
Goldman Sachs analyst Rod Hall reiterated his “Neutral” rating and $85.00 per share price on NTAP as he believes much of Q2 strength is already priced into shares.
“NetApp reported strong FQ1 results and raised its FY’22 guidance on the back of an acceleration in all-flash revenue as well as continued momentum in cloud data services. We note Public Cloud margins came in ahead of our expectations with the potential to increase further if mix continues to improve. We like NetApp’s new revenue and gross margin disclosures on the cloud business and believe the company is well positioned to take advantage of a favorable enterprise spending environment,” Hall wrote in a client note.