Data storage and services company NetApp early Friday broke out to its highest level since November 2000 after its Q3 FY2024 results late Thursday. Rival PureStorage continued climbing after its earnings earlier this week.
San Jose, Calif.-based NetApp reported a 41.6% increase in adjusted earnings to $1.94 per share on 5% revenue growth to $1.61 billion. FactSet analysts expected earnings of $1.69 per share on $1.59 billion in revenue. The results marked the second straight quarter of accelerating earnings gains.
NetApp's data storage services are divided into two segments, hybrid cloud and public cloud. Hybrid cloud utilizes a mix of physical data infrastructure and cloud services for storage, while public cloud uses cloud computing services.
NetApp's hybrid cloud segment revenue rose 5.8% to $1.46 billion while its public cloud business recorded $151 million in revenue, up $1 million from the prior year. Billings increased 7% to $1.69 billion.
The company's public cloud annualized revenue run rate (ARR) rose to $608 million, a slight uptick from $605 million in Q3 FY23. All-flash array ARR jumped 21% to $3.4 billion. An all-flash array is an external storage system that only uses flash media devices for storage.
NetApp posted a record adjusted operating margin of 30% and a record adjusted gross margin of 73%.
NetApp Outlook
For the fourth quarter, NetApp guided adjusted earnings between $1.73 and $1.83 per share, compared to $1.54 per share the year prior. The company sees Q4 revenue ranging from $1.585 billion to $1.735 billion, up from $1.581 billion.
The forecast came in ahead of analyst estimates of $1.76 per share on $1.65 billion in sales.
The company lifted its full-year 2024 earnings guidance to range from $6.40 to $6.50 per share, up from the previous outlook of $6.05 to $6.25 per share. NetApp sees full-year revenue ranging from $6.185 billion to $6.335 billion. It previously guided a 2% revenue decline for the year.
FactSet analysts expect full-year earnings of $6.31 per share on $6.24 billion in revenue.
A number of firms lifted their price targets on NTAP stock after results.
Stifel lifted its target to $120 from $105 and maintained a buy rating on the shares after NetApp's "clean beat-and-raise." The company's differentiated hybrid, multi-cloud strategy should benefit top-line demand drivers and provide incremental margin upside, the firm wrote in a research note.
Barclays hoisted its price target to $100 from $80 noting strong margins and good artificial intelligence momentum. The firm maintained a buy rating on the shares.
NetApp Stock Rallies
NTAP stock bolted 23% higher early Friday to spike well above a 91.78 buy point for a 13-week flat base. Shares are trading at their highest level since November 2000, MarketSmith charts show.
NetApp rose about 1% this year through Thursday's close.
PureStorage stock rose 2.2% early Friday. PSTG stock on Thursday rocketed 25% after beating Q4 expectations late Wednesday. Shares vaulted nearly 48% this year through Thursday.
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