By Sam Boughedda
Shares of NetApp (NASDAQ:NTAP) were downgraded to Neutral from Positive at Susquehanna by an analyst on Monday.
In a wide-ranging note on technology hardware stocks, the analyst said their newly introduced FY24 estimates for NetApp reflect a mid-single-digit year-over-year decline in hybrid cloud revenues, mainly driven by a decrease in product revenues.
"The company has certainly benefitted from double-digit Y/Y increase in AFA revenues, up 20% Y/Y in FY22. However, we are forecasting a deceleration in the growth rate, reaching 12% growth in FY23 and low single-digit growth in FY24. We don't have confidence or visibility to argue that AFA growth rate would accelerate in FY25," said the analyst.
Susquehanna is also forecasting 30% year-over-year growth in public cloud revenues in FY24 for NetApp, following 55% growth in FY23.
"Despite continued increase in the mix of Public Cloud revenues, it is the Product revenue decline within the Hybrid Cloud that in our view drives a Y/Y decline in FY24 revenues. As such, our FY24 EPS estimate of $5.30 also reflects a new mid-single digit Y/Y decline and is 12% below the current consensus estimate," the analyst added.
NetApp shares are down over 2% Monday.