On Tuesday, Citi maintained its Neutral stance on NetApp (NASDAQ:NTAP), but increased the price target to $120 from the previous $110. The firm highlighted a positive catalyst watch for the company, anticipating that it will benefit from an uptick in underlying storage demand trends.
During NetApp's forthcoming Analyst Day event, Citi expects the company to reaffirm its confidence in achieving mid-single-digit revenue growth. This comes along with an anticipation of sustained product margins, despite a shift toward higher-margin flash products that come with a greater software component and rising memory component costs.
The upgraded price target reflects higher peer multiples in the industry, suggesting a more favorable valuation landscape for companies like NetApp. Citi's analysts are looking for signs of sustainable market share gains and a stronger trajectory in cloud revenues before adopting a more bullish position.
Despite the positive outlook on industry demand and NetApp's margin management, Citi is awaiting further evidence of the company’s performance in key areas. Specifically, they seek confirmation of NetApp's ability to capture market share consistently and to enhance its cloud revenue streams.
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