Wells Fargo Securities Reiterates on Netapp on Nice Execution In A Tough Environment

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

. In the report, Wells Fargo Securities noted, “FQ2 revenue of $1.55B was below our estimate of $1.64B (Street: $1.60B) mainly due to softness in the U.S. Federal segment (though somewhat anticipated). Non-GAAP EPS of $0.66 was in line with our estimate (Street: $0.62) and $0.01 above the high-end of guidance driven by improvement in gross margins (63.6%, up 230bps sequentially and above our 60.8% est) and slightly lower opex. NTAP guided FQ3 revs to increase about 5% seq. at the midpoint though maintained some conservatism given expectations for continued macro challenges. We are lowering our FY2014 rev/EPS est to $6.4B/$2.75 from $6.7B/$2.82 (FY2015 EPS to $3.00 from $3.18) to reflect results and guidance. Adjusting valuation range to $39-43 (from $38-42) as we move forward our valuation to FY2015E FCF (11-12x our $3.59/share).” NetApp closed on Wednesday at $41.29.