On Tuesday, Loop Capital raised its rating on NetApp (NASDAQ:NTAP) stock from Hold to Buy and increased its price target to $150 from the previous $121. This change follows the firm's long-term tracking of the stock and a recent dip in its price.
According to Loop Capital, the decision to upgrade NetApp comes after more than a year of closely following the stock's performance. The firm acknowledged that an attempt was made to anticipate the market last summer but the stock’s price began to climb, resulting in a missed opportunity. Loop Capital is now seizing the moment following a 9% decline in NetApp's share price last week after the company reported its July quarter earnings on August 28.
The new price target of $150 reflects an 18 times multiple on the firm's projected calendar year 2026 earnings per share (EPS) of $8.35. Loop Capital cites three significant structural trends and NetApp's unique Hyperscale Storage Software as key drivers for the company's growth in the coming years.
Loop Capital's optimism is based on what it sees as durable catalysts that will support NetApp's business. The firm believes that these factors combined with the recent pullback in share price present a favorable buying opportunity for investors.
The upgrade and new price target suggest that Loop Capital has a positive outlook on NetApp's future financial performance and market position. The firm's analysis points to potential gains for shareholders as the company capitalizes on industry trends and its proprietary technology.
In other recent news, NetApp, a leader in cloud data services, has reported robust first-quarter results for fiscal year 2025, marking an 8% year-over-year increase in revenue, along with record-breaking operating margin and earnings per share (EPS).
TD Cowen has reiterated a Buy rating on NetApp, citing the company's continued progress in core products, including those related to artificial intelligence (AI). The firm also commended the introduction of NetApp's new All-Flash Array (AFA) series.
NetApp's CFO, Mike Berry, announced his retirement effective at the end of the fiscal year, ensuring a smooth transition. Despite this change in leadership, TD Cowen maintains its price target for NetApp, suggesting confidence in the company's strategy and its potential for continued growth.
The company has raised its revenue and profit outlook for the fiscal year, indicating confidence in its growth trajectory. NetApp aims for mid-to-upper single digit revenue growth and double-digit EPS growth through fiscal year 2027. The company also plans to return up to 100% of its free cash flow to shareholders this year. These are some of the recent developments that have transpired within NetApp.
InvestingPro Insights
Following the recent rating upgrade by Loop Capital, NetApp (NASDAQ:NTAP) demonstrates a strong financial posture with a market capitalization of $24.72 billion and a robust gross profit margin of 71.11% over the last twelve months as of Q1 2023. The company's commitment to shareholder returns is evident through consistent dividend payments for 12 consecutive years, with a dividend yield of 1.72% and a recent growth of 4.0% in dividends. These figures underscore NetApp's stability and investor-friendly approach.
InvestingPro Tips highlight management's active share buyback strategy and a positive sentiment from analysts, with 14 analysts revising their earnings upwards for the upcoming period. These insights align with Loop Capital's optimistic view, reinforcing NetApp as a prominent player in the Technology Hardware, Storage & Peripherals industry. For investors seeking deeper analysis, there are 11 additional tips available on InvestingPro, indicating further nuances of NetApp's financial health and market position.
The recent price dip of 9.31% over the last week may present a strategic entry point for investors, especially considering the stock's strong return of 58.9% over the past year. With NetApp trading at a high Price / Book multiple of 26.61, it is crucial for potential investors to weigh this valuation against the company's growth prospects and industry position. The upcoming earnings date on November 26 will provide further clarity on NetApp's trajectory.
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