NetApp initiated with a Neutral at Citi

Citi analyst Asiya Merchant initiated coverage of NetApp with a Neutral rating and $80 price target. The analyst started a number of technology hardware names with a “mixed stance.” The hardware sector is going through a period of cyclical downturn, following a sharp acceleration in pandemic-induced demand, the analyst tells investors in a research note. The firm says commercial PCs are seeing early signs of recovery while datacenter compute and storage could continue to remain pressured. Given the “significant correlation” of stock price performance and earnings estimate revisions, Citi is “selectively biased” towards companies that are strongly positioned to areas that are poised for recovery, have mix shift enabled margin expansion and “de-risked” estimates. For NetApp, the firm sees near-term demand weakness stemming from continued cautious customer demand in a challenged macro environment.