) hit a new 52-week high of $43.69 on Sep 11, 2013, eventually
closing at $43.43. The closing share price represented an
outstanding one-year return of 23.4% and year-to-date return of
NetApp has been witnessing growing demand for its ONTAP suite,
higher sales of flash storage devices (led by growing demand for
smartphones and tablets) and double-digit growth in branded
products. Moreover, the company's EF540 SSD enterprise storage is
witnessing accelerated growth.
Moreover, favorable product mix and cost optimization are
positively impacting the company's margins. Association with
) are the positives for the company. The company is also gaining
traction in mobility, big data, flash and cloud segments.
In NetApp's last-reported quarter (1Q14), the company posted
better-than-expected earnings primarily due to higher revenue
base and margin expansion. Revenues jumped 5.0% year over year,
on the back of higher branded revenues.
NetApp's indirect revenues remained strong, coming through the
channels and original equipment manufacturers (OEMs). Arrow and
Avnet contributed 21% and 16% of the total revenue, respectively.
Buoyed by the margin expansion and lower operating expenses,
earnings jumped 48.0% on a year-over-year basis.
Moreover, the company provided a positive outlook for the
second quarter with revenues in the range of $1.560 billion to
$1.660 billion, representing approximately 6.0% sequential growth
and 5.0% year-over-year growth at the mid-point. Management
expects earnings in the range of 60 cents to 65 cents per share,
up 18.0% to 27.0% from the year-ago quarter.
We believe that NetApp's innovative product line-up, frequent
updates and shareholder-friendly activities will boost
profitability, going forward. However, a sluggish macroeconomic
environment coupled with tepid IT spending and competition from
its peers are the headwinds for the company.
Currently, NetApp has a Zacks Rank #3 (Hold).
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