NetApp Shares Upgraded To Buy, Summit Redstone Much More Convinced In Company's Outlook

Following the NetApp Insight User Conference, Summit Redstone’s Srini Nandury expressed increased optimism regarding the outlook for NetApp Inc. NTAP being more promising than it was a year ago.

Nandury upgraded the rating on the company from Sell to Buy, while raising the price target from $30 to $45.

Positive Outlook

After the appointment of CEO George Kurian in 2015, the analyst had been waiting for NetApp to demonstrate that it had made progress with regard to aligning its cost structure and executing on its growth agenda.

“We are convinced that the company is on the right track and we believe estimates have bottomed and NetApp can grow its product revenue from current levels,” Nandury stated, while adding, “NetApp now has the products and discipline to follow through on the strategy it has embarked upon.”

Goodwill Among Customers

After discussions with the company’s customers and partners during the Insight User Conference, the analyst expressed optimism regarding NetApp growing its product revenue, driven by AFA sales and increased adoption of clustered ONTAP (“cDOT”).

“NetApp’s cDot transition, while still lumpy, has been much smoother than we had previously anticipated and the impact of declines on the topline continues to diminish,” Nandury noted.

Discussions with customers also revealed that the company had built goodwill among its installed base, and that very few customers were replacing NetApp infrastructure with that of other vendors.

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