NetApp ( NTAP ) has delivered strong results in recent years, with earnings and revenue beating market expectations more often than not. The company is scheduled to announce earnings on May 23, and we expect it to report another solid quarter, driven mainly by growth in the product and software maintenance businesses. We expect NetApp to report earnings of about $1.02 per share on revenues of $1.59 billion for the quarter, based on our interactive model for NetApp . Moreover, NetApp's solid growth and favorable outlook have led to stock price appreciation, with the stock up nearly 30% so far in 2018. We maintain a $74 price estimate for the NetApp's stock , which is ahead of the current market price. Below we take a look at some of the key trends that we will be watching when the company reports earnings.
Strategic Products Business Will Likely Drive The Growth In The Company
In the current fiscal year, NetApp has witnessed solid revenue growth, driven primarily by strategic products. Solid demand for the company's all-flash storage product line has led to solid revenue growth in the latter part of the year, which we expect will continue when the company reports its fiscal Q4 earnings on Wednesday. The transition to flash storage arrays has been a positive for the company, with this part of the business seeing around 50% year-on-year growth. As a result of increased product sales, NetApp's share in the storage systems market has been on the rise, per data compiled by IDC. Given that the company has been gaining traction among its customers with the help of solutions such as Data Fabric and ONTAP Data Management Software, we expect further growth in NetApp's market share. Meanwhile, the deal to power Microsoft's Azure Enterprise NFS service and the launch of NFLEX converged infrastructure with Fujitsu will further boost the top line.
Net Margins Will Likely Improve
The company continues to focus on selling a higher mix of strategic products, which includes high-margin flash storage products. This has helped the company improve its net margin in recent quarters. We expect margins to slightly expand in the upcoming quarter. Moreover, with NAND prices stabilizing, the company should be able to optimize the pricing of its products.
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