Brean Murray Reiterates Hold Rating on NetApp

In a report published Monday, Brean Murray, Carret & Co. reiterated its Hold rating on NetApp NTAP. Brean Murray noted, “We remain cautious on NTAP into earnings on 8/15 while acknowledging the stock appears attractively valued on traditional metrics (FCF and P/E ex‐cash), and maintain our below CY2012 Street EPS stance of $1.90 (vs. Street at $2.05). We'd also argue that trading at a 15x P/E the stock isn't yet ‘cheap' relative to Jul Q – Jan Q revenue growth (ramping potentially to 6%‐8% from flat currently IF NTAP does the midpoint of its Jul Q revenue guidance and then normal seasonality in 2H12). We believe NTAP could be cautious on their Oct Q revenue guide, suggesting there could be some risk to Street (which is at normal seasonality of 5% growth), and believe there could be some risk to 2H12 GM from pricing pressure (while acknowledging NTAP could gain some benefit from reduced HDD ASPs and increased volume).” NetApp closed on Friday at $32.58.