NetApp Inc. (NASDAQ: NTAP) stock enhanced 3.8% on September 19th, 2017 (as of 11:47AM EDT; Source: Google finance) after UBS upgraded the stock to “Buy” from their “Neutral” rating. Analysts from UBS believes that the new management has put new life into the product line and introduced financial discipline. The group’s product gross margin is likely to increase with less discounting, which could lead to a better consensus earnings in F18-20, as per analyst Steven Milunovich from UBS. Moreover, longer-term concerns on the group had decreased as per the analyst and believes that services would come back, while the downside is limited by a better execution and reasonable valuation.
For the first quarter of 2018, the group’s net Revenues surged 2% yoy to $1.33 Billion while Product revenue enhanced 10% on a year-over-year basis. All-flash array annualized net revenue run rate surged 95% on a year-over-year basis. The group reported a GAAP EPS of $0.49 and non-GAAP EPS of $0.62 which rose 113% and 35%, respectively on a yoy basis.
The group has $5.3 billion in total cash as of first quarter of 2018. The group strengthened all-flash array and converged infrastructure offerings, and augmenting their Data Fabric strategy. Customers are preferring the group as their partner for data-driven digital transformations.
For the second quarter of 2018, Net revenues are forecasted to be in the range of $1.31 billion to $1.46 billion. GAAP Earnings per share is expected to be in the range of $0.47 – $0.55.
The group’s FlexPod™ SF converged infrastructure solution offers ideal infrastructure for the data-intensive scale-out workloads that are critical to digital transformation. They are positioning to leverage digital transformation opportunity with leadership in new IDC category of hybrid cloud data services. Accordingly, they expanded collaboration with Microsoft Azure in hybrid cloud data services to deliver enterprise-grade visibility and insights, data access and control, as well as data protection and security for customers moving to Microsoft Azure. ONTAP™ select software-defined storage is optimized for new use cases, including a new remote office/branch office solution and enterprise NAS services in more diverse storage environments. OnCommand™ Insight (OCI) added new functions to ease hybrid cloud migration and optimize hybrid cloud resources with accurate workload placement and resizing. ONTAP enhancements comprised new FabricPool feature for automatic and transparent tiering of inactive data to the cloud while expanded inline deduplication across multiple pools of storage to increase storage efficiency.