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San Jose, California-based NetApp, Inc. (NTAP) provides a range of enterprise software, systems, and services that customers use to transform their data infrastructures. Valued at $24 billion by market cap, the company's storage solutions include specialized hardware, software, and services that provide storage management for open network environments.
Shares of NetApp have outperformed the broader market considerably over the past year. NTAP has gained 48.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.4%. In 2024, NTAP stock is up 33%, surpassing the SPX’s 23.1% rise on a YTD basis.
Zooming in further, NTAP’s outperformance is also apparent compared to the Technology Select Sector SPDR Fund (XLK). The exchange-traded fund has gained about 25.5% over the past year. Moreover, NTAP’s returns on a YTD basis outshine the ETF’s 18.8% gains over the same time frame.
NetApp has outperformed due to its focus on innovative storage solutions, strong customer relationships, and strategic partnerships with tech leaders. The company's all-flash portfolio and cloud storage services, particularly its Keystone offering, have driven growth, with continued demand for its All-Flash Array portfolio being a key factor. Notably, NetApp has secured over 50 AI and data lake modernization wins, including contracts with a leading oil and gas company and a top financial institution, leveraging its AI-driven hardware for high-performance computing environments. Additionally, cost-cutting measures and expanding hybrid cloud business have contributed to improved profitability, positioning NetApp for sustained success.
On Aug. 28, NTAP shares closed down marginally after reporting its Q1 results. The company’s revenue stood at $1.5 billion, up 7.7% year over year. Its adjusted EPS increased 35.7% year over year to $1.56.
For the current fiscal year, ending in April 2025, analysts expect NTAP’s EPS to grow 12.9% to $5.71 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion. Moreover, the company surpassed its consensus EPS estimate by 7.8% in the previous quarter.
Among the 19 analysts covering NTAP stock, the consensus is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, 12 “Holds,” and one “Moderate Sell.”
This configuration is more bullish than three months ago, with five analysts suggesting a “Strong Buy.”
On Sep. 24, Evercore ISI analyst Amit Daryanani maintained a “Hold” rating on NTAP with a price target of $130, implying a potential upside of 10.9% from current levels.
The mean price target of $133.75 represents a 14.1% premium to NTAP’s current price levels. The Street-high price target of $155 suggests an upside potential of 32.2%.
