Shares of data infrastructure company NetApp (NASDAQ:NTAP) jumped nearly 18% in Friday’s pre-market trading. Investors cheered NTAP’s better-than-expected Q3 performance and upbeat full-year EPS outlook.
The company is witnessing continued strength in its all-flash products and Hyperscaler First Party and Marketplace Services. As a result, it expects to achieve Fiscal 2024 revenues in the range of $6.185 to $6.335 billion. Additionally, NetApp has revised its EPS forecast for Fiscal 2024 upward to $6.40 to $6.50 from its previous guidance of $6.05 to $6.25. The shift towards higher-margin all-flash products is expected to impact its bottom line positively.
Notably, the company is witnessing solid demand led by artificial intelligence (AI). This is reflected through dozens of customer wins in the quarter. Further, the company is developing Generative AI-driven cloud and on-premises solutions to capitalize on the AI demand.
NTAP’s Q3 Sales and Earnings Top Estimates
NetApp delivered revenue of $1.61 billion in Q3, up 5% year-over. Higher sales in its Hybrid Cloud segment, momentum in the newly introduced all-flash products, and changes in its go-to-market strategies supported its top-line growth. Moreover, its revenue exceeded analysts’ estimate of $1.59 billion.
NTAP’s EPS of $1.94 registered a year-over-year growth of 41.6%. Further, it surpassed the Street’s consensus estimate of $1.69.
Is NetApp Stock a Buy?
Wall Street analysts are sidelined on NetApp stock amid concerns around macro enterprise spending. It has one Buy, four Holds, and one Sell recommendation for a Hold consensus rating. NTAP stock has gained nearly 42% in one year. Thus, analysts’ average price target of $93.20 implies a limited upside potential of 4.58%.
