Analyst Note| Mark Cash |
We are raising our fair value estimate for no-moat NetApp to $60 per share from $54 behind a strong fourth quarter and better expectations in the storage market over the longer term. NetApp easily topped our revenue growth expectations as broad-based demand caused a bounce-back in growth compared with the prior year. We believe NetApp is making proper strategic decisions with the growth in higher margin all flash array storage and push into public cloud services. However, our enthusiasm remains subdued when taking a longer-term view in that the storage market includes sizable market competitors proclaiming similar growth priorities and the overarching general shift of workloads being moved and stored within the public cloud. With shares trading around $77, we recommend a pullback before investing.