Analyst Note| Mark Cash |
No-moat NetApp reported a strong quarter with revenue at the high end of previous guidance and non-GAAP earnings exceeding guidance as nascent ventures gain momentum with the market. Quarterly strength resulted primarily from growth in NetApp’s all-flash array, or AFA, and cloud services segments. We believe that the COVID-19 pandemic accelerated the digital transformations and shift to the cloud undertaken by many of NetApp’s customers, which we think bodes well for the adoption of hybrid-cloud ecosystems and flexible data management solutions. As a result, we are raising our fair value estimate to $54 from $49 per share, but still view shares as overvalued.