Market Overview

NetApp's Business Still Sluggish

NetApp's Business Still Sluggish

Although sluggish demand for enterprise storage and intensifying competitive pressures may continue to impact NetApp Inc. (NASDAQ: NTAP)'s performance, the current consensus estimates seem to be underestimating the EPS upside from cost reduction, BTIG’s Edward Parker said in a report, while maintaining a Neutral rating on the company.

NetApp is scheduled to report its FQ3 results Wednesday. Ongoing cost reductions at the company drive shares through the second half of 2016, and would likely lead to upward EPS revisions over the next couple of quarters, Parker noted.

Business Sluggish

“Our enterprise storage checks suggest that demand has been quite sluggish at year end and we believe there is no indication of a material change in the company’s sales momentum,” Parker wrote. He added that while comps are favorable, the recent investor excitement around product transition could “prove to be premature.”

Related Link: Goldman Previews Arista, NetApp, Zebra Tech Earnings; Prefers NetApp

EPS Upside

NetApp is taking steps to reduce headcount by ~18 percent. Although comps are impacted by the SolidFire acquisition and the ongoing realignment and reinvestment activities, the consensus forecasts reflect year-over-year operating expense declines of only ~5 percent and 1 percent in fiscal year 2017 and 2018, respectively, which “seems too low given the magnitude of the headcount reductions,” the analyst stated.

Image Credit: By Patrick Pelletier - Own work, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for NTAP

Dec 2020Morgan StanleyUpgradesEqual-WeightOverweight
Dec 2020Goldman SachsUpgradesSellNeutral
Dec 2020Loop CapitalUpgradesHoldBuy

View More Analyst Ratings for NTAP
View the Latest Analyst Ratings


Related Articles (NTAP)

View Comments and Join the Discussion!

Posted-In: Analyst Color Earnings News Guidance Previews Reiteration Analyst Ratings Tech Best of Benzinga

Latest Ratings

DEBMO CapitalMaintains400.0
PRITruist SecuritiesMaintains165.0
SHAKJP MorganMaintains70.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at