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Investing.com - Morgan Stanley (NYSE:MS) has assumed coverage on NetApp (NASDAQ:NTAP), a prominent player in the Technology Hardware, Storage & Peripherals industry with a market capitalization of $21.7 billion, with an Equalweight rating and a price target of $115.00. According to InvestingPro data, the company maintains an impressive 70% gross profit margin.
The firm notes that after strong performance in 2023 and 2024 where NetApp gained market share in flash and mid-range storage markets with its C Series, recent storage checks have turned more cautious.
Morgan Stanley points out that competitors Dell (NYSE:DELL) and HPE have launched new competitive products and benefited from cross-selling storage alongside server solutions, creating headwinds for NetApp as the only legacy pure-play enterprise storage vendor.
This competitive pressure is reflected in NetApp’s valuation at 12.3x Morgan Stanley’s FY27 EPS estimate, approximately 0.7 standard deviation below the company’s trailing 5-year average.
The firm highlights that 10% of NetApp’s business has cloud exposure with potential for continued double-digit growth, but expresses concern that if AI storage fails to materially penetrate on-premises data centers, NetApp would primarily focus on less compelling traditional enterprise workloads. Despite these challenges, NetApp has demonstrated resilience with 4.85% revenue growth and has maintained dividend payments for 13 consecutive years. For deeper insights into NetApp’s growth potential and comprehensive analysis, investors can access the full Pro Research Report on InvestingPro.
In other recent news, NetApp reported its fiscal fourth-quarter earnings for 2025, surpassing analyst expectations with earnings per share (EPS) of $1.93, compared to the forecast of $1.89. The company also reported a revenue of $1.73 billion, slightly exceeding the anticipated $1.72 billion. Despite these strong results, NetApp’s cautious revenue outlook for the first quarter of fiscal year 2026 has been noted, with expected growth of about 1% year-over-year, adjusting for the sale of the Spot asset. UBS has adjusted its price target for NetApp shares to $108 from $115, maintaining a Neutral rating, while JPMorgan reduced its price target to $115 from $120, but kept an Overweight rating. Both firms acknowledged NetApp’s strong performance, with UBS highlighting a 14% year-over-year growth in all-flash array annual recurring revenue and JPMorgan noting a 22% growth in the Public Cloud segment. Additionally, NetApp has appointed Syam Nair as its new Chief Product Officer, effective July 7, 2025. Nair succeeds Harv Bhela, who concluded his tenure in June.
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