NetApp Posts Solid Q2 Results, Raises Guidance; Shares Jump 2.4%

California-based NetApp, Inc. (NTAP) reported strong financial results for the fiscal second quarter ended October 29 after the market closed on Tuesday. Thereafter, the stock gained 2.4% in the extended trading session.

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NetApp is a hybrid cloud data services and data management company that is engaged in the design, production and sale of storage and data management solutions. It offers cloud data services, data storage software, data backup and recovery, all-flash storage, converged systems, data infrastructure management, ONTAP data security, and hybrid-flash storage services.

Earnings and Revenues

Adjusted earnings per share (EPS) stood at $1.28, higher than the Street’s estimate of $1.21 and the year-ago figure of $1.05.

Net revenues increased 11% year-over-year to $1.57 billion, just above analysts’ expectations of $1.55 billion. (See Insiders’ Hot Stocks on TipRanks)

Segment Revenues

Hybrid Cloud segment revenue totaled $1.48 billion, compared to $1.37 billion last year; and Public Cloud segment revenue rose to $87 million from $47 million in the second quarter of last fiscal year.

CEO Comments

The CEO of NetApp, George Kurian, said, “We delivered another strong quarter, with results all at the high end or above our guidance. Our performance reflects a strong demand environment, a clear vision, and exceptional execution by the NetApp team and gives the confidence to raise our full-year guidance for revenue, EPS and Public Cloud ARR.”

Outlook

For the third quarter, the company anticipates net revenues and adjusted EPS in the range of $1.525 billion to $1.675 billion and $1.21 to $1.31, respectively. The Street expects NTAP to post revenues of $1.59 billion and earnings of $1.28 per share in the third quarter.

For Fiscal Year 2022, NTAP expects the net revenues growth rate to range from 9% to 10% and adjusted EPS to lie between $4.90 and $5.10.

Analysts’ expect earnings of $5.01 per share and revenues to total $6.26 billion.

Analysts’ Recommendation

Overall, the stock has a Moderate Buy consensus rating based on 3 Buys, 2 Holds and 1 Sell. The average NetApp price target of $100 implies 12.5% upside potential. Shares have gained 64.1% over the past year.

Risk Analysis

According to TipRanks’ Risk Factors tool, NetApp is at risk mainly from one factor: Finance & Corporate, which accounts for 29% of the total 38 risks identified for the stock. Under the Finance & Corporate risk category, the company has 11 risks, details of which risks can be found on the TipRanks website.