Citi Expects 'Lukewarm' Quarter For NetApp

In a report published Thursday, Citi analysts maintained their Neutral rating and price target of $39 on

, following the company's "lukewarm" 2FQ results and forward guidance. While FX headwinds pressured the revenue for 4FQ, the underlying storage demand appeared to have weakened. The analysts believe that the indicators so far point towards the company posting its top line and EPS either in-line or slightly below expectations. "We believe there is risk of a modest guide-down (for the July quarter) given that revs have declined by an average of 11% q/q during the past two years, and mgt may error on the side of cautious given a lukewarm demand environment," the analysts said. The analysts also expressed their concern regarding the impact of high-end refresh by NetApp's competitors, whether storage start-ups were having a favorable impact on sales, updates regarding incremental adoption of ONTAP 8 among the current users, details regarding cloud service providers and visibility into European demand.