We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NetApp (NTAP) Up 46% Year to Date: Will the Rally Continue?
Read MoreHide Full Article
NetApp’s (NTAP - Free Report) shares have been performing well on the trading front, with a gain of 46.1% year to date compared with the 15% growth of the S&P 500 composite.
Solid financial performance is driving a good run on the trading front. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the other with an average surprise of 8.8%.
NetApp provides enterprise storage as well as data management software and hardware products and services. The San Jose, CA-based company assists enterprises in managing multiple cloud environments, adopting next-generation technologies like artificial intelligence (AI), Kubernetes and contemporary databases, and navigating the complexity brought by the quick development of data and cloud usage.
Image Source: Zacks Investment Research
Growth Catalysts
Solid demand across the all-flash and cloud storage portfolio is driving top-line expansion. Data-driven digital and cloud transformations involving business analytics, AI, data security and application modernization remain secular growth drivers.
The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market.
The AI-driven landscape has pushed organizations to innovate swiftly, enhance customer experiences, combat cyber threats and boost productivity. This new product aims to offer intelligent data infrastructure to unlock the potential of AI-driven insights. The new AFF A-Series systems extend its footprint in unified data storage for the next generation of workloads.
In the fourth quarter of fiscal 2024, the company’s All-Flash Array Business’s annualized net revenue run rate was $3.6 billion, up 17% year over year. Total billings rose 8% year over year to $1.8 billion.
Frequent product launches, strengthening go-to-market activities and various cloud collaborations are aiding NetApp in driving top-line performance. Extensive cost discipline is boosting margin performance.
The company’s advanced portfolio of ransomware protection solutions is expected to gain momentum amid rising cybersecurity risks. Its hyper-scaler partnerships and natively integrated storage services will help to tap the growing demand for generative AI.
NetApp expects its strengthening position in tackling critical customer priorities, such as business analytics, AI, cloud transitions, data security and application modernization, to drive further expansion.
The company expects fiscal 2025 revenues in the band of $6.45-$6.65 billion compared with revenues of $6.27 billion in the prior year. Management also expects Public Cloud revenues to return to steady growth in fiscal 2025. Public Cloud Services recorded revenues of $152 million in the fourth quarter of fiscal 2024, up 1% year over year.
Healthy Capital Allocation Strategy
NetApp’s cash, cash equivalents and investments were $3.252 billion as of Apr 26. Its long-term debt was $1.992 billion in the same period. For the fiscal fourth quarter, the company generated net cash from operations was $613 million compared with $235 million in the prior-year quarter. Free cash flow was $567 million (free cash flow margin of 34%) compared with $196 million in the prior-year quarter (12.4%).
A strong balance sheet helps the company to continue its shareholder-friendly initiatives via dividend payouts and share buybacks. The company returned $204 million and $1.32 billion to its shareholders as dividend payouts and share repurchases in the fiscal fourth quarter and fiscal year, respectively. It also announced a 4% hike in its quarterly dividend and an additional $1 billion share repurchase authorization.
Estimates Activity
The Zacks Consensus Estimate for NTAP’s fiscal 2025 and 2026 revenues is pegged at $6.55 billion and $6.81 billion, respectively, which indicates year-over-year growth of 4.4% and 4.1%.
The Zacks Consensus Estimate for earnings per share for fiscal 2025 and fiscal 2026 is expected to surge 6.2% and 7% year over year, respectively, to $6.86 and $7.34.
The Zacks Consensus Estimate for fiscal 2025 and 2026 EPS has increased 3.2% and 3.1%, respectively, in the past 60 days, reflecting analysts’ optimism.
Headwinds Persist
However, an unfavorable macroeconomic environment and price increases on NAND from suppliers continue to remain concerns for this Zacks Rank #3 (Hold) stock.
Stiff competition from Pure Storage in all-flash business and cloud-based storage offerings is another headwind.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 EPS is pegged at $2.53. NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 24%. The long-term earnings growth rate is 37.6%. Shares of NVDA have risen 158.1% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.05, unchanged in the past 30 days. The long-term earnings growth rate is 16.1%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.5%. Shares of ANET have gained 120.1% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has remained unchanged in the past 30 days at $5.88. WWD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 26.1%. The long-term earnings growth rate is 16.5%. Shares of WWD have risen 44.2% in the past year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
NetApp (NTAP) Up 46% Year to Date: Will the Rally Continue?
NetApp’s (NTAP - Free Report) shares have been performing well on the trading front, with a gain of 46.1% year to date compared with the 15% growth of the S&P 500 composite.
Solid financial performance is driving a good run on the trading front. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the other with an average surprise of 8.8%.
NetApp provides enterprise storage as well as data management software and hardware products and services. The San Jose, CA-based company assists enterprises in managing multiple cloud environments, adopting next-generation technologies like artificial intelligence (AI), Kubernetes and contemporary databases, and navigating the complexity brought by the quick development of data and cloud usage.
Image Source: Zacks Investment Research
Growth Catalysts
Solid demand across the all-flash and cloud storage portfolio is driving top-line expansion. Data-driven digital and cloud transformations involving business analytics, AI, data security and application modernization remain secular growth drivers.
The company expects the new AFF A-series, along with its C-series and ASA products, to capture further share in the all-flash market.
The AI-driven landscape has pushed organizations to innovate swiftly, enhance customer experiences, combat cyber threats and boost productivity. This new product aims to offer intelligent data infrastructure to unlock the potential of AI-driven insights. The new AFF A-Series systems extend its footprint in unified data storage for the next generation of workloads.
In the fourth quarter of fiscal 2024, the company’s All-Flash Array Business’s annualized net revenue run rate was $3.6 billion, up 17% year over year. Total billings rose 8% year over year to $1.8 billion.
Frequent product launches, strengthening go-to-market activities and various cloud collaborations are aiding NetApp in driving top-line performance. Extensive cost discipline is boosting margin performance.
The company’s advanced portfolio of ransomware protection solutions is expected to gain momentum amid rising cybersecurity risks. Its hyper-scaler partnerships and natively integrated storage services will help to tap the growing demand for generative AI.
NetApp expects its strengthening position in tackling critical customer priorities, such as business analytics, AI, cloud transitions, data security and application modernization, to drive further expansion.
The company expects fiscal 2025 revenues in the band of $6.45-$6.65 billion compared with revenues of $6.27 billion in the prior year. Management also expects Public Cloud revenues to return to steady growth in fiscal 2025. Public Cloud Services recorded revenues of $152 million in the fourth quarter of fiscal 2024, up 1% year over year.
Healthy Capital Allocation Strategy
NetApp’s cash, cash equivalents and investments were $3.252 billion as of Apr 26. Its long-term debt was $1.992 billion in the same period. For the fiscal fourth quarter, the company generated net cash from operations was $613 million compared with $235 million in the prior-year quarter. Free cash flow was $567 million (free cash flow margin of 34%) compared with $196 million in the prior-year quarter (12.4%).
A strong balance sheet helps the company to continue its shareholder-friendly initiatives via dividend payouts and share buybacks. The company returned $204 million and $1.32 billion to its shareholders as dividend payouts and share repurchases in the fiscal fourth quarter and fiscal year, respectively. It also announced a 4% hike in its quarterly dividend and an additional $1 billion share repurchase authorization.
Estimates Activity
The Zacks Consensus Estimate for NTAP’s fiscal 2025 and 2026 revenues is pegged at $6.55 billion and $6.81 billion, respectively, which indicates year-over-year growth of 4.4% and 4.1%.
The Zacks Consensus Estimate for earnings per share for fiscal 2025 and fiscal 2026 is expected to surge 6.2% and 7% year over year, respectively, to $6.86 and $7.34.
The Zacks Consensus Estimate for fiscal 2025 and 2026 EPS has increased 3.2% and 3.1%, respectively, in the past 60 days, reflecting analysts’ optimism.
Headwinds Persist
However, an unfavorable macroeconomic environment and price increases on NAND from suppliers continue to remain concerns for this Zacks Rank #3 (Hold) stock.
Stiff competition from Pure Storage in all-flash business and cloud-based storage offerings is another headwind.
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are NVIDIA Corporation (NVDA - Free Report) , Arista Networks (ANET - Free Report) and Woodward (WWD - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 EPS is pegged at $2.53. NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 24%. The long-term earnings growth rate is 37.6%. Shares of NVDA have risen 158.1% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.05, unchanged in the past 30 days. The long-term earnings growth rate is 16.1%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.5%. Shares of ANET have gained 120.1% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has remained unchanged in the past 30 days at $5.88. WWD’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 26.1%. The long-term earnings growth rate is 16.5%. Shares of WWD have risen 44.2% in the past year.