NetApp: A Strong Performer in the Cloud Storage Market
NetApp, Inc. (NTAP), based in San Jose, California, is a leading provider of data management and cloud storage solutions for businesses embracing hybrid and multi-cloud settings. With a market cap of $25 billion, the company delivers hardware, software, and services aimed at enhancing digital transformation.
A Year of Remarkable Growth
Over the past year, NetApp shares have significantly outperformed the broader market, gaining 33.1% compared to a 20.7% rise in the S&P 500 Index ($SPX). However, in 2025, NTAP’s stock has climbed just 3%, slightly short of the SPX’s 3.1% increase on a year-to-date basis.
Strong Metrics Against the Competition
Further analysis reveals that NTAP has significantly outperformed the Technology Select Sector SPDR Fund (XLK), which saw a modest 13.7% growth over the past year and just 1.6% this year.
Solid Financials and AI Innovations
NetApp’s impressive performance is chalked up to robust financial results and strong cloud services demand, along with strategic innovations like AI-optimized storage solutions, including the AIPod, which positions the company for the growing enterprise AI market.
Earnings Report Highlights
On November 21, NetApp released its Q2 fiscal 2025 earnings, reporting $1.7 billion in revenue, up 6% year-over-year, alongside adjusted earnings per share (EPS) of $1.87, which surpassed analysts’ expectations of $1.78. The growth was propelled by a 43% increase in cloud storage revenue and strong sales in all-flash storage. Following the earnings report, NTAP shares rose over 2%, reflecting a positive sentiment among investors. Furthermore, the company raised its full-year earnings forecast, boosting overall market confidence.
Future Earnings Expectations
Looking ahead to the current fiscal year ending in April 2025, analysts are predicting a 16.4% rise in NTAP’s EPS to $5.89 on a diluted basis. NetApp’s historical earnings performance has been mixed, beating estimates in three of the last four quarters while falling short in one instance.
Analysts Rate NTAP as a Moderate Buy
Among 19 analysts covering NTAP stock, the consensus rating is a “Moderate Buy,” comprising five “Strong Buy” ratings, 13 “Holds,” and one “Moderate Sell.” This is a slight downturn compared to a month ago when seven analysts rated it as a “Strong Buy.”
Recent Analyst Downgrade
On February 10, Susquehanna Community Financial, Inc. (SQCF) downgraded NetApp from “Positive” to “Neutral,” lowering the price target from $155 to $130. The firm highlighted growing risks to earnings forecasts, particularly for the upcoming July and October quarters due to challenging year-over-year comparisons. Despite NetApp’s strong market position, Susquehanna noted that its current valuation reflects its gains, and the expected surge in enterprise AI demand may not significantly impact until 2026.
Price Targets Indicate Potential Upside
The average price target of $140.20 suggests a 17.3% increase from NTAP’s current share price, while the highest target of $160 indicates a substantial upside potential of 33.8%.
On the date of publication, Kritika Sarmah 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.
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