Has NetApp Turned The Public Cloud Market From A Headwind To A Tailwind?

Shares of NetApp Inc. NTAP hit a new 52-week high of $39.90 on Tuesday after analysts at Piper Jaffray upgraded the stock to Overweight from Neutral with a price target boosted to $46 from a previous $37.

Piper Jaffray's Andrew Nowinski argued in his upgrade note that NetApp can deliver a mid-single digit revenue growth due to the increased adoption of its Strategic products. Specifically, the analyst believes that revenue within the Strategic segment could accelerate as soon as the first quarter, driven by increasing adoption of all-flash cDOT arrays and Solidfire.

AFA Market

Moreover, NetApp also holds a key product advantage within the All-Flash market (AFA), which is expected to grow at a 24 percent compounded annual growth rate (CAGR) through 2020.

Related Link: NetApp's Business Still Sluggish

The company also guarantees a 4:1 data reduction rate and offers customers a free controller upgrade after three years.

Cloud

Nowinski also stated that NetApp's software portfolio is able of generating revenue within both the public cloud and software-defined storage markets.

The analyst added that just two years ago, NetApp didn't "have an answer" for customers that wanted to leverage the public cloud. Today the company's ONTAP Cloud for AWS and Azure, ONTAP Select for SDS and AltaVault for backing update to the cloud.

"We believe these products will transform the public cloud market from a headwind into a tailwind," the analyst noted.

The Bottom Line

Bottom line, Nowinski stated that demand trends for NetApp's products and services "modestly improved" through the end of January with many several large deals in excess of $5 million finalized.

In addition, the company saw improved demand for its all-flash cDOT arrays and also the Solidfire arrays.

Image Credit: By Paul Hammond - here, CC BY 2.0, via Wikimedia Commons