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NetApp (NTAP) Looks Promising on Upbeat Q1: Time to Buy?
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NetApp (NTAP - Free Report) shares have been rallying since first-quarter 2019 earnings release on Aug 15, 2018. In fact, the companyhas outperformed the industry over the past year. Shares of NetApphave gained 115.8% compared with the industry’s growth of 21.1%. Its price performance is backed by an impressive earnings surprise history. The company surpassed earnings estimates in each of the trailing four quarters, recording an average beat of 15.3%.
Recently, NetApp delivered stellar first-quarter fiscal 2019 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. The impressive results were driven by strong product adoption, increasing deal wins, and expanding customer base across varied geographies. Moreover, the company’s transition to data fabric strategy (a software-defined approach to data management) is expanding business opportunities.
Further, the company increased momentum of its HCI and expanded new cloud partnerships, which contributed to overall revenue growth.
Meanwhile, the consensus estimate for the company’s 2019 and 2020 earnings has also been revised upward by 9.4% and 5.8%, respectively, over the past 30 days, reflecting optimism in the stock’s earnings prospects.
Robust Performance: NetApp delivered fiscal first-quarter 2019 non-GAAP earnings of $1.04 per share, beating the Zacks Consensus Estimate of 80 cents per share. The figure surged from 62 cents per share reported in the year-ago period and was also above the guided range.
Revenues of $1.474 billion increased 12% from the year-ago quarter, surpassing the Zacks Consensus Estimate of $1.423 billion. The figure was well within the guided range.
The company’s Product revenues (49% of total revenues) increased 20% year over year to $875 million. This was the seventh consecutive quarter of product revenue growth, driven primarily by continuous strength in company’s all-flash array business along with approximately $16 million from strategic enterprise agreements.
Notably, the company’s all-flash array business surged 50% on a year-over-year basis in the last reported quarter. Its annualized net revenue run rate was $2.2 billion.
Solid Growth Prospects: NetApp has solid growth prospects, as is apparent from the Zacks Consensus Estimate for current-year earnings of $4.42 per share, which is expected to grow 27.4% year over year. Meanwhile, the company’s revenues are anticipated to increase by 6.2% in fiscal 2019. Moreover, its earnings and revenues are expected to rise 11.4% and 4.6% in fiscal 2020, respectively. Overall, the company seems a great pick in terms of growth investment, supported by a Growth Score of A.
Solid VGM Score: The company has an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2 (Buy) make solid investment choices.
Encouraging Outlook: For second-quarter fiscal 2019, NetApp expects non-GAAP earnings in the range of 94 cents to $1.00 per share. The Zacks Consensus Estimate for the current quarter is pegged at 99 cents.
Net revenues are anticipated to be in the range of $1.450-$1.550 billion, implying growth of 6% at the mid-point from the year-ago quarter. The Zacks Consensus Estimate is pegged at $1.51 billion.
Management remains hopeful of the momentum in its hybrid cloud business. Its differentiated product portfolio and strong distribution channels will keep demand and adoption of the products robust going ahead.
For fiscal year 2019, net revenues are anticipated to increase in mid-single digits. The company raised margins and EPS guidance. NetApp now expects EPS growth to be in mid-20s (previous guidance was more than 15% growth rate).
Other Growth Drivers: NetApp unveiled the all new AFF A800 array, a high performance, cloud-connected flash system to power AI and compute-intensive applications.
The company also updated its flagship NetApp ONTAP 9 software which emphasizes on improvements to FabricPool and hybrid cloud data tiering. It also gives support to Microsoft Azure.
During the reported quarter, the company also announced new FlexPod solutions to simplify the delivery of cloud infrastructure and provide focused industry-specific applications.
Management was particularly optimistic about its expanded partnership with Microsoft (MSFT - Free Report) Azure for the development of the industry’s first cloud-based enterprise, Network File System (“NFS”) delivered via Azure. Moreover, the company looks to widen its reach with the announcement of NFLEX converged infrastructure with Fujitsu management.
The company is positive about making the most of the exponential rate of data growth with its cloud-integrated all-flash solutions that integrate well with hybrid cloud infrastructure.
The company’s expertise in the flash array market is aiding its popularity in storage area network (SAN) and converged infrastructure markets. The company’s hyper-converged infrastructure is also anticipated to be a positive for the top line in the long run.
Other Stocks to Consider
Other top-ranked stocks in the broader technology sector include Paycom Software, Inc. (PAYC - Free Report) and Mellanox Technologies, Ltd. , both carrying a Zacks Rank #1.
Paycom Software and Mellanox have a long-term earnings growth rate of 24.8% and 15%, respectively.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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NetApp (NTAP) Looks Promising on Upbeat Q1: Time to Buy?
NetApp (NTAP - Free Report) shares have been rallying since first-quarter 2019 earnings release on Aug 15, 2018. In fact, the companyhas outperformed the industry over the past year. Shares of NetApphave gained 115.8% compared with the industry’s growth of 21.1%. Its price performance is backed by an impressive earnings surprise history. The company surpassed earnings estimates in each of the trailing four quarters, recording an average beat of 15.3%.
Recently, NetApp delivered stellar first-quarter fiscal 2019 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. The impressive results were driven by strong product adoption, increasing deal wins, and expanding customer base across varied geographies. Moreover, the company’s transition to data fabric strategy (a software-defined approach to data management) is expanding business opportunities.
Further, the company increased momentum of its HCI and expanded new cloud partnerships, which contributed to overall revenue growth.
Meanwhile, the consensus estimate for the company’s 2019 and 2020 earnings has also been revised upward by 9.4% and 5.8%, respectively, over the past 30 days, reflecting optimism in the stock’s earnings prospects.
Let’s delve deeper into the other factors that make this Zacks Rank #1 (Strong Buy) stock a lucrative pick. You can see the complete list of today’s Zacks #1 Rank stocks here.
What Makes NetApp a Solid Pick?
Robust Performance: NetApp delivered fiscal first-quarter 2019 non-GAAP earnings of $1.04 per share, beating the Zacks Consensus Estimate of 80 cents per share. The figure surged from 62 cents per share reported in the year-ago period and was also above the guided range.
Revenues of $1.474 billion increased 12% from the year-ago quarter, surpassing the Zacks Consensus Estimate of $1.423 billion. The figure was well within the guided range.
The company’s Product revenues (49% of total revenues) increased 20% year over year to $875 million. This was the seventh consecutive quarter of product revenue growth, driven primarily by continuous strength in company’s all-flash array business along with approximately $16 million from strategic enterprise agreements.
Notably, the company’s all-flash array business surged 50% on a year-over-year basis in the last reported quarter. Its annualized net revenue run rate was $2.2 billion.
Solid Growth Prospects: NetApp has solid growth prospects, as is apparent from the Zacks Consensus Estimate for current-year earnings of $4.42 per share, which is expected to grow 27.4% year over year. Meanwhile, the company’s revenues are anticipated to increase by 6.2% in fiscal 2019. Moreover, its earnings and revenues are expected to rise 11.4% and 4.6% in fiscal 2020, respectively. Overall, the company seems a great pick in terms of growth investment, supported by a Growth Score of A.
Solid VGM Score: The company has an impressive VGM Score of B. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics. In fact, our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 or 2 (Buy) make solid investment choices.
Encouraging Outlook: For second-quarter fiscal 2019, NetApp expects non-GAAP earnings in the range of 94 cents to $1.00 per share. The Zacks Consensus Estimate for the current quarter is pegged at 99 cents.
Net revenues are anticipated to be in the range of $1.450-$1.550 billion, implying growth of 6% at the mid-point from the year-ago quarter. The Zacks Consensus Estimate is pegged at $1.51 billion.
Management remains hopeful of the momentum in its hybrid cloud business. Its differentiated product portfolio and strong distribution channels will keep demand and adoption of the products robust going ahead.
For fiscal year 2019, net revenues are anticipated to increase in mid-single digits. The company raised margins and EPS guidance. NetApp now expects EPS growth to be in mid-20s (previous guidance was more than 15% growth rate).
Other Growth Drivers: NetApp unveiled the all new AFF A800 array, a high performance, cloud-connected flash system to power AI and compute-intensive applications.
The company also updated its flagship NetApp ONTAP 9 software which emphasizes on improvements to FabricPool and hybrid cloud data tiering. It also gives support to Microsoft Azure.
During the reported quarter, the company also announced new FlexPod solutions to simplify the delivery of cloud infrastructure and provide focused industry-specific applications.
Management was particularly optimistic about its expanded partnership with Microsoft (MSFT - Free Report) Azure for the development of the industry’s first cloud-based enterprise, Network File System (“NFS”) delivered via Azure. Moreover, the company looks to widen its reach with the announcement of NFLEX converged infrastructure with Fujitsu management.
The company is positive about making the most of the exponential rate of data growth with its cloud-integrated all-flash solutions that integrate well with hybrid cloud infrastructure.
The company’s expertise in the flash array market is aiding its popularity in storage area network (SAN) and converged infrastructure markets. The company’s hyper-converged infrastructure is also anticipated to be a positive for the top line in the long run.
Other Stocks to Consider
Other top-ranked stocks in the broader technology sector include Paycom Software, Inc. (PAYC - Free Report) and Mellanox Technologies, Ltd. , both carrying a Zacks Rank #1.
Paycom Software and Mellanox have a long-term earnings growth rate of 24.8% and 15%, respectively.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>