What Wall Street Is Saying About NetApp's Q2

Here is a summary of what Wall Street analysts are saying.

Morgan Stanley

• Katy Huberty of Morgan Stanley maintains an Underweight rating with a price target raised to $26 from a previous $24.
• Huberty noted easier comps and uncertainty among the Dell/EMC customer base could help the company.
• However, strategic product revenue only grew 1 percent compared to 21 percent in the prior four quarters despite adding SolidFire to the portfolio earlier this year.

JMP

• John Lucia of JMP Securities maintains a Market Underperform rating with a price target raised to $29 from a previous $24.
• Lucia noted he was encouraged with the company's margins in the quarter.
• However, the analyst noted that overall revenues fell 7 percent year-over-year and strategic storage solutions grew just 1 percent after growing as much as 24 percent in prior quarters.

Jefferies

• James Kisner of Jefferies maintains a Hold rating with a price target raised to $38 from a previous $34.
• Kisner noted that NetApp's earnings per share beat was driven largely by opex and guidance for the third quarter was ahead of consensus estimates.
• Kisner also stated that the quarter communicated less encouraging signs such as declining product revenue, poor Strategic Solutions growth and a weak third-quarter product gross margins as implied by its guidance.

Goldman Sachs

• Simona Jankowski of Goldman Sachs maintains a Neutral rating with a price target raised to $36 from a previous $32.
• According to Jankowski, NetApp's solid second quarter and guidance indicate the business is stabilizing after a sharp deterioration.
• However, the analyst stated that the extremely competitive storage market space continues to weigh on the company's products gross margins.

Credit Suisse

• Kulbinder Garcha of Credit Suisse maintains a Neutral rating with a price target raised to $30 from a previous $28.
• According to Garcha, NetApp's quarter benefited from strong operating margins and revenue guidance was higher than expected.
• Nevertheless, the analyst remains concerned that structural issues may reside in the competitiveness of its offering.

Citi

• Jim Suva of Citi maintains a Neutral rating with a price target raised to $39 from a previous $33.
• Suva noted he is incrementally positive on the stock given improving margins and better opex management.
• The analyst's price target is now based on a 9.4x multiple, up from a prior multiple of 8–9.

Barclays

• Mark Moskowitz of Barclays maintains an Underweight rating with a price target raised to $27 from a previous $25.
• The analyst noted that the strong gains in the stock is surprising following a "just-okay" earnings print.
• Moskowitz is most concerned over the significant deceleration in strategic revenue growth and that storage system revenue fell nearly 13 percent.

At last check before publication, NetApp was up 9.96 percent at $38.19.