NetApp Outshines Market with Impressive Growth and Earnings Report
San Jose, California-based NetApp, Inc. (NTAP) specializes in enterprise software, systems, and services designed to enhance data infrastructures. With a market cap of $24 billion, the company offers various storage solutions, including specialized hardware and software for managing storage in open network environments.
Strong Performance Against Market Benchmarks
Over the past year, NetApp’s shares have significantly outperformed the broader market. NTAP increased by 48.5%, while the S&P 500 Index ($SPX) grew nearly 30.4%. Since the beginning of 2024, NTAP stock has gained 33%, exceeding the SPX’s 23.1% rise year to date.
Comparison with Technology Sector
In comparison to the Technology Select Sector SPDR Fund (XLK), NTAP’s outperformance is evident. The ETF has reported a gain of about 25.5% over the past year, whereas NTAP’s year-to-date returns far surpass the ETF’s 18.8% gains in the same period.
Key Drivers of NetApp’s Success
NetApp’s success is largely attributed to its emphasis on innovative storage solutions and robust customer relationships. Strategic partnerships with major tech companies have also played a vital role. The all-flash portfolio and cloud storage services, especially the Keystone offering, have fueled growth. The company has already made over 50 wins in AI integration and data lake modernization, including collaborations with top firms in the oil and gas and financial sectors. Moreover, cost-cutting strategies and an expanding hybrid cloud business have bolstered profitability, setting the stage for continued progress.
Latest Financial Results
On August 28, NTAP shares dipped slightly following its Q1 earnings report. Revenue stood at $1.5 billion, reflecting a 7.7% increase year over year. Adjusted earnings per share (EPS) rose by 35.7% year over year to reach $1.56.
Future Earnings Outlook
For the ongoing fiscal year, concluding in April 2025, analysts project NTAP’s EPS to grow by 12.9% to $5.71 on a diluted basis. The company’s earnings record is mixed; it exceeded the consensus estimate in three of the last four quarters, missing only once. Notably, NTAP surpassed consensus EPS estimates by 7.8% in the latest quarter.
Analyst Ratings Highlight Positive Sentiment
Among the 19 analysts following NTAP stock, the consensus rating is “Moderate Buy,” comprising six “Strong Buy” ratings, 12 “Holds,” and one “Moderate Sell.” This outlook is more favorable than seen three months ago, when just five analysts recommended a “Strong Buy.”
Price Targets Suggest Further Growth
On September 24, Evercore ISI analyst Amit Daryanani maintained a “Hold” rating on NTAP, setting a price target of $130, which implies a potential upside of 10.9%. The average price target of $133.75 indicates a 14.1% premium to NTAP’s current levels, while the highest target of $155 suggests a promising upside potential of 32.2%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
