Cloud-based data storage and services company NetApp (NASDAQ:NTAP) slashed its Fiscal 2023 outlook, citing worsening macro conditions and significant currency headwinds. It now expects full-year revenue growth in the range of 2% to 4% and adjusted earnings per share of $5.30 to $5.50. NetApp had earlier guided revenue growth of 6% to 8% and adjusted EPS of $5.40 to $5.60. NTAP stock tumbled 11% in Tuesday’s extended trading session.
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The company delivered mixed results for the second quarter of Fiscal 2023 (ended October 28, 2022). Revenue increased 6% year-over-year to $1.66 billion, slightly falling short of analysts’ consensus estimate of $1.67 billion.
Revenue growth decelerated compared to 9% in Fiscal Q1 due to a slowdown in the cloud storage services business. NetApp, like other tech peers, is seeing moderate growth in certain divisions as enterprises are optimizing their spending amid a tough macro backdrop. Meanwhile, adjusted EPS increased nearly 16% to $1.48, handily beating analysts’ expectation of $1.33.
Coming to Fiscal Q3 guidance, NetApp expects revenue in the range of $1.525 billion to $1.675 billion and adjusted EPS to be between $1.25 to $1.35. The Q3 outlook lagged analysts’ revenue and EPS estimates of $1.7 billion and $1.44, respectively. Given the challenging business conditions, management is taking initiatives to lower operating expenses, including a hiring freeze, reduction of discretionary expenditures, and optimization of the real estate footprint.
Is NetApp a Good Stock to Buy?
Wall Street’s Moderate Buy consensus rating for NetApp stock is based on two Buys and two Holds. The average NetApp price target of $83.50 implies 16.3% upside potential. NTAP stock has declined 22% year-to-date.
