2023-04-10 09:23:50 ET
NetApp ( NASDAQ: NTAP ) shares rose more than 1% in premarket trading as investment firm Stifel upgraded the cloud data services company, citing potential catalysts in fiscal 2024.
Analyst Matthew Sheerin raised his rating to buy from hold and put a $75-a-share target price on NetApp ( NTAP ) shares, noting that when the demand cycle bottoms out, the company should benefit from the recent workforce reduction, a planned re-organization in sales to help more closely align reps with customers and vendors, lower component costs and the introduction of the QLC-based, lower-cost all-flash arrays.
Sheerin said he came away from meetings feeling "more confident" in his 2024 earnings estimate of $5.49 a share for NetApp ( NTAP ). In a research noSheerin said his forecast reflects a "soft" first half of the company's fiscal year, and earnings-per-share growing in the back half of the year.
Delving deeper, Sheerin noted that NetApp's ( NTAP ) management said much of the weakness from its all-flash business has come from lower spending at larger enterprise customers and service providers. But this should turn around, as the company expects its all-flash array market share to grow over time, due in part to its higher-end TLC products and its more affordable C-Series.
Additionally, the company may see a "modest tailwind" in margins as NAND prices have declined in recent quarters, though most of the savings would benefit customers due to lower prices, Sheerin added, quoting NetApp ( NTAP ) management.
Last month, NetApp ( NTAP ) partnered with CGI focused on helping organizations accelerate their transformation to the cloud .
Analysts are largely bullish on NetApp ( NTAP ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates NTAP a HOLD .
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NetApp rises as Stifel upgrades, citing 'potential positive catalysts'