NetApp stock price target cut to $115 at JPMorgan

On Friday, JPMorgan’s technology sector analyst adjusted the price target for NetApp (NASDAQ:NTAP) shares to $115.00, down from the previous $120.00, while maintaining an Overweight rating on the stock. With a current market capitalization of $20.18 billion and trading at an attractive PEG ratio of 0.77, InvestingPro analysis suggests the stock is slightly undervalued relative to its Fair Value, aligning with JPMorgan’s bullish stance. The revision followed NetApp’s fiscal fourth-quarter 2025 earnings report, which revealed record revenues, operating profits, and earnings per share (EPS). The company’s performance was bolstered by market share gains and a robust 22% year-over-year growth in its Public Cloud segment, adjusted for the divestiture of Spot. InvestingPro data shows impressive fundamentals, including a strong gross profit margin of 70.62% and overall revenue growth of 5.29% over the last twelve months. The company maintains a healthy Piotroski Score of 8, indicating strong financial health.

Despite the strong results, NetApp’s fiscal year 2026 revenue guidance indicated nearly 3% year-over-year growth, which was perceived as conservative compared to market expectations. JPMorgan’s analysis suggests this cautious outlook aligns with broader industry trends and challenges, including macroeconomic uncertainty, tariffs, and specific headwinds in the public sector within Europe and the United States. The guidance also reflects the impact of the Spot divestiture; without this factor, the projected growth stands at approximately 4% year-over-year.

The bank noted that while the revenue growth forecast for fiscal year 2026 was below their initial expectations, it was not entirely surprising. The guidance is consistent with the initial 4% growth projection for fiscal year 2025, which NetApp exceeded despite facing execution issues in the second half of the year. Currently trading at a P/E ratio of 17.7x and offering a dividend yield of 2.1%, NetApp continues to deliver shareholder value. For deeper insights into NetApp’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence. Additionally, the analyst pointed out that while AI-related revenues are increasing, they are not yet significant enough to counterbalance weaknesses in traditional infrastructure use cases. The recent appointment of a new CFO at NetApp may also contribute to a more conservative guidance approach amid uncertain economic conditions.

In light of these factors, JPMorgan has revised its revenue growth outlook for NetApp’s fiscal year 2026 to 3% year-over-year, down from the previous 4%. The EPS forecast has also been adjusted to $7.75 from the earlier $8.75, aligning with the company’s guidance. However, the analyst believes that the conservative guidance may position NetApp to potentially exceed expectations and adjust forecasts upward throughout the fiscal year, driven by market share gains from a strong product portfolio.

The Overweight rating reflects JPMorgan’s confidence in NetApp’s ability to outperform its peers, particularly following the launch of its C-series, AFF-A series, and ASA products. The bank anticipates that NetApp’s leading market position and refreshed product line will enable the company to continue gaining market share. Additionally, opportunities to accelerate earnings growth through operating leverage, coupled with stable or improving gross margins from a better product mix, support the positive outlook. Despite the lowered earnings forecast, JPMorgan’s revised price target of $115 is based on these continued strengths.

In other recent news, NetApp Inc. reported its fourth-quarter earnings for fiscal year 2025, exceeding analyst expectations. The company posted an earnings per share (EPS) of $1.93, surpassing the forecast of $1.89, and revenue reached $1.73 billion, slightly above the anticipated $1.72 billion. Despite these positive results, the company’s stock experienced a decline, reflecting investor concerns over future growth prospects amid macroeconomic uncertainties. NetApp also provided a cautious revenue guidance for fiscal year 2026, projecting between $6.625 billion and $6.875 billion. The company’s AI business saw significant growth, expanding fivefold year-over-year. Additionally, NetApp’s All Flash Array annualized revenue run rate increased by 14%. Analysts have noted the company’s strategic positioning in the AI market and its potential as a growth driver, although challenges such as macroeconomic uncertainty and market saturation remain.

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