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NetApp tumbles 15% after cutting guidance, analysts lower numbers

Published 11/30/2022, 06:33 AM
Updated 11/30/2022, 06:56 AM
© Reuters.  NetApp (NTAP) tumbles 15% after cutting guidance, analysts lower numbers

By Senad Karaahmetovic

Shares of NetApp Inc (NASDAQ:NTAP) are trading almost 15% lower in pre-open Wednesday after the company delivered mixed FQ2 results and slashed its full-year forecast.

NetApp delivered an adjusted EPS of $1.48 on revenue of $1.66 billion, which compares to the consensus of $1.33 on sales of $1.68B. Hybrid cloud net revenue rose by almost 3% to $1.52B, in line with the consensus.

“We delivered a solid quarter in a dynamic environment, with all-time highs for Q2 revenue, billings, gross profit dollars, operating income, and EPS,” said George Kurian, CEO of NetApp.

At the midpoint of its FQ3 forecast, NetApp expected adjusted EPS at $1.30 on revenue of $1.605B. This is lower than the expectations of $1.44 on sales of $1.71B. On a full-year basis, NTAP said it expects revenue to increase between +2% and +4% while the adjusted EPS is seen at $5.40 (up or down $0.10), again below the consensus of $5.51.

Morgan Stanley analysts cut the price target to $66 per share from $71 after “light” FQ2 results.

“NTAP's PCS growth engine sputtered in FQ2, as high tech and service provider customers became more conservative with spend and pace of cloud transitions. While macro weakness could have been anticipated on premise business, surprised to the degree to which it impacted the cloud business as well,” they wrote in a note.

Stifel analysts also slashed the price target as they went to $75 from $78 per share.

“We are maintaining our Hold rating, as we believe it is too early to call the bottom of this down-spending cycle,” the analysts said after earnings.

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