On Wednesday, TD Cowen exhibited confidence in NetApp (NASDAQ:NTAP), raising the stock’s price target to $145 from $135 while maintaining a Buy rating. The firm’s decision comes as NetApp forecasts revenue growth in the mid-to-high single digits for the fiscal years 2025 to 2027, which surpasses the market’s expectations of mid-single digit (MSD) growth.
The company has acknowledged that it did not meet the revenue outlook set two years prior for FY25. However, NetApp has exceeded expectations in operating margin (OM) and now projects an OM of over 30% by FY27. This would imply earnings per share (EPS) of more than $8. The firm believes that these targets are achievable, but they hinge on a modest enterprise storage refresh cycle, which is anticipated to be driven by advancements in artificial intelligence (AI) and a resurgence in Public Cloud growth.
TD Cowen’s positive stance on NetApp is rooted in the company’s ability to surpass its operating margin goals and its strong projections for the coming years. The firm expresses a favorable view of NetApp’s strategic direction and potential for financial performance.
NetApp’s management has set ambitious goals, and the firm’s endorsement reflects a belief in the company’s capacity to fulfill these objectives. The raised price target and sustained Buy rating signal to investors that NetApp is positioned to thrive in the evolving technological landscape, particularly as AI and cloud services continue to expand.
In other recent news, NetApp has seen significant developments. The company’s fourth-quarter results for fiscal year 2024 surpassed expectations, mainly due to strong demand for its All-Flash Arrays and improved margins, leading to revenue growth projections of around 4.5% year-over-year for FY25E.
NetApp has appointed Mike Sakalas as its Vice President of U.S. Enterprise Sales, aiming to enhance strategic customer engagements and elevate the customer experience in the U.S. market. Analysts from Evercore ISI, J.P. Morgan Securities, BCI, US, and Citi Research maintain a neutral rating, while Argus and TD Cowen have shown optimism by raising their price targets and maintaining a Buy rating for NetApp. NetApp’s public cloud revenues are expected to return to healthy growth in FY25E after overcoming subscription-related headwinds.
The company’s all-flash array portfolio saw a 17% increase in revenue, reaching an annualized rate of $3.6 billion. NetApp’s Storage-as-a-Service solution, Keystone, doubled its total contract value to nearly $150 million. The company anticipates total revenue for fiscal year 2025 to be between $6.45 and $6.65 billion, with an EPS range of $6.80 to $7.00. These are some of the recent developments in the company.
NetApp’s recent performance and strategic initiatives have caught the attention of market analysts, and real-time data from InvestingPro corroborates this positive outlook. With a market capitalization of $25.82 billion and a P/E ratio standing at 26.55, NetApp showcases stability in the tech sector. The company’s price to book ratio, as of the last twelve months, is at a lofty 22.53, potentially reflecting the market’s confidence in NetApp’s assets relative to its share price.
InvestingPro Tips highlight that NetApp has been a solid performer with a high shareholder yield and management that is actively engaging in share buybacks. Additionally, the company has maintained dividend payments for 12 consecutive years, with a current dividend yield of 1.66%. These factors, combined with a strong return over the last year at 79.9% and the stock trading near its 52-week high, paint a picture of a company that is not only growing but also rewarding its shareholders.
For those interested in diving deeper into the financial health and future prospects of NetApp, there are 17 additional InvestingPro Tips available, offering a comprehensive analysis. To explore these insights, consider subscribing to InvestingPro with an exclusive 10% discount using the coupon code PRONEWS24.
