Wells Fargo Securities Lowers Valuation Range for NetApp

In a report published Wednesday, Wells Fargo Securities analyst Maynard Um reiterated a Market Perform rating on

. In the report, Wells Fargo Securities noted, “We are lowering our valuation range to $34-39 from $38-43 based on a slightly lower multiple of roughly 10x. Our reasons are two-fold - 1) continued lengthening (and risk) of sales cycles due to customers evaluating cloud as well as new product options from competitors and 2) growing concern with regard to the portfolio given the heightening trend of more workload specific arrays. With regard to the quarter, we note that management, in the past, has managed costs well (recall the restructuring announcement in March), possibly offsetting any potential revenue pressures. With roughly 40% of its market cap in net cash and our expectation for the company to still be cash flow generative, we believe the risk/reward is fairly balanced. We will be looking for any tone with regard to change in strategy particularly in light of recent Board changes. We maintain our Market Perform rating.” NetApp closed on Tuesday at $34.98.