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NetApp (NASDAQ:NTAP) Share increased more than 11% in premarket trading Wednesday, as Wall Street praised the data infrastructure company for a “slight” improvement in demand and rising gross margins following its quarterly results and guidance.
JP Morgan analysts, led by Samik Chatterjee, slightly increased their price target on NetApp (NTAP) shares, rising from $86 to $89, citing the surprising increase in product margins.
“While the revenue beat and rising full-year revenue expectations run counter to recent expectations, particularly in light of the challenging macroeconomic backdrop in which most companies are lowering guidance for everything the year or pointing to weaker revenue over the next 90 days and pushing “If we carry recovery expectations to the end of the year, the biggest surprise for investors is around margins, as product gross margins hit a record of 61% and total operating margins hit a record 27% in the quarter,” the analysts wrote.
For the period ending Oct. 27, NetApp (NTAP) said its annualized cloud revenue was $609 million, up from $603 million in the prior period. Annualized all-flash array revenue was $3.2 billion, up from $3.1 billion in the second quarter.
During the quarter, NetApp (NTAP) earned an adjusted $1.58 per share as revenue declined 6.1% year over year to $1.56 billion. Analysts had expected adjusted earnings of $1.39 per share on $1.53 billion in revenue.
“We expect strong revenue performance, led by a strong product cycle, to restore investor confidence in the competitive positioning of NetApp’s portfolio and drive greater confidence in the likelihood of superior revenue performance.” of the hybrid cloud segment on the underlying dynamics of the storage market in the face of a difficult macroeconomic context,” added the JP Morgan analysts.
Wedbush analyst Matt Bryson raised his price target to $85 from $75 and said that while there wasn’t enough to raise the company’s Neutral rating, there is reason to believe NetApp (NTAP) will “very likely” beat the short term bars you set. for the coming quarters. Additionally, Bryson said NetApp’s (NTAP) strength in all-flash array and gross margins are a positive reading for Pure Storage (PSTG), which reports its own quarterly results after the close of trading.
TD Cowen analyst Krish Sankar raised the company’s price target to $100 from $90 after the results, noting that the company’s history and guidance suggest it is in the “late innings” of the down cycle. of enterprise storage. Sankar also said the results are a positive reading for Pure Storage (PSTG).
Pure Storage stocks (PSTG) increased more than 3% in pre-market operations after results.
