Shares of cloud data services company, NetApp (NASDAQ: NTAP) fell in morning trading on Thursday morning after it was downgraded by top-rated Bank of America analyst Wamsi Mohan to Sell from a Hold and lowered the price target to $58 from $70. The analyst’s price target implies a downside potential of 8.5% at current levels.
The analyst stated that the company’s growth in product revenues could be “challenged” over the coming months due to a weak demand environment. Mohan commented, “Although product [gross margins] will see some benefits, we also expect negative leverage from lower [revenues].”
Mohan added that NetApp’s recent reduction of 8% of its workforce is unlikely to be an “incremental tailwind” to current estimates. The analyst noted that the first half of FY24 could see “incremental pressure” in the form of additional operating expenses and does not expect that the company’s substantial loss in market share when it comes to flash arrays is likely to reverse anytime soon.
Besides Mohan, other analysts remain sidelined about NTAP stock with a Hold consensus rating based on five Buys, eight Holds, and two Sells.