Business

NetApp has room for downside


© Reuters. NetApp (NTAP) has room for downside – Morgan Stanley

By Sam Boughedda

NetApp (NASDAQ:) has been downgraded to Underweight from Equal-Weight, with a price target reduced to $58 from $66 by Morgan Stanley analysts in a note on telecom and networking gear stocks on Tuesday.

They explained that the company downgraded NetApp in their view that the company’s back office has room for downside in today’s cloud business digestibility phase, which has been the driving force behind the high name grant.

“UW is a relative call, but we do not believe the estimated revisions are complete,” the analysts wrote. “NetApp reported a disappointing outlook for on-premises and cloud businesses in terms of their Q2 earnings last month. The reason is, they saw on-premises assets and business operations across sweat cloud platform.”

The analysts added that commentary from the company’s most recent NASDAQ conference noted that the analysis period would likely span multiple quarters, making Morgan Stanley “more uncertain that the revisions to the estimate finished, especially given the visibility of NTAP’s more challenging exposure to this part of the business.”

“While there isn’t much downside to our price target, we feel like a combination of short-term revision risk estimates and underperformance of the asset that investors are looking for. investors are willing to pay more, putting the brand at risk of underperforming in the next 12 months,” the analysts concluded.



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