By In the recent quarterly results, NetApp has outperformed expectations, showcasing a positive growth trajectory in the cloud industry. Despite this impressive performance, J.P. Morgan’s Samik Chatterjee remains skeptical.
Financial Superiority
NetApp reported earnings of $1.94 per share for the third fiscal quarter, surpassing the consensus estimate of $1.69 among analysts tracked by FactSet. The company also saw a 5% increase in revenue to $1.61 billion, exceeding the expected $1.59 billion.
Industry Demand
CEO George Kurian highlighted the growing demand for artificial intelligence, attracting customers seeking to implement large-model training environments. Simultaneously, some clients are striving to enhance budget flexibility in light of rising interest rates and economic uncertainty.
Positive Outlook
NetApp foresees an adjusted profit ranging from $1.73 to $1.83 per share for the ongoing fourth quarter, surpassing analysts’ predictions of $1.73. Furthermore, the company anticipates full fiscal year profits between $6.40 and $6.50 per share, a notable increase from the previous forecast of up to $6.25 per share. The Wall Street consensus had projected $6.14 per share.
These stellar results underscore NetApp’s resilience and competitiveness in the ever-evolving cloud storage and data-protection landscape.
Upbeat Outlook Contrasts Analyst Views
Despite impressive results, J.P. Morgan remains cautious, keeping a rating of Underweight or Sell regarding storage spending priorities for customers.
Forecast for Fiscal Year 2025
J.P. Morgan predicts a modest growth of around 1% in NetApp’s earnings for fiscal year 2025, forecasting $6.50 per share, slightly lower than the consensus of $6.59 per share. While management refrained from giving a specific forecast, they expressed confidence in the company’s positioning moving forward.
Diverging Opinions
While J.P. Morgan sets a stock price target of $95 for 2024, raising it from $87, NetApp’s stock value surged by 24% to $110.04, signaling significant growth potential.
However, Susquehanna Financial Group’s Mehdi Hosseini offers a more optimistic perspective, with a Positive rating and a price target increase to $115, citing potential earnings surpassing Wall Street’s expectations due to the shift towards AI model migration to the public cloud.
Mixed Analyst Ratings
With over two-thirds of analysts maintaining a Hold rating on the stock, divergent opinions reflect varying analyses of NetApp’s future earnings and growth prospects.
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