Goldman Previews Arista, NetApp, Zebra Tech Earnings; Prefers NetApp

Among a slew of upcoming technology earnings, Goldman Sachs expects a modest beat and raise from NetApp Inc. NTAP, projects an in-line number from Arista Networks Inc ANET and anticipates sluggish retail trends to weigh on Zebra Technologies Corp. ZBRA results.

Following is a brief preview of the above companies, according to analysts Simona Jankowski and Matthew Cabral:

NetApp: Rated Buy, $43 Price Target, Earnings Release On Wednesday

Jankowski expects third-quarter revenue/non-GAAP EPS of $1.40 billion/$0.77, ahead of the Street at $1.39 billion/$0.74. For the fourth quarter (April), the analyst estimates revenue/non-GAAP EPS of $1.41 billion/$0.80 versus consensus of $1.41 billion/$0.77.

Jankowski sees a modest beat and raise from NetApp’s third-quarter results on the strength of its growing flash portfolio and a cyclical upturn in IT hardware spending. Also, the analyst expects product gross margins to benefit from benign pricing and continued cost takeouts. The analyst models product gross of 48 percent in the third quarter.

Arista: Sell, PT $60, Thursday

Goldman sees fourth quarter sales of $316 million, largely in line with the Street at $317 million and expects on-GAAP EPS of $0.86, above consensus at $0.82. The analyst models gross margins down 150bps from last year.

Despite expecting an in-line results from Arista for its fourth quarter, the analyst sees see risk to first quarter given the import ban implemented in January by U.S. Customs. Further, Jankowski expects consensus margin expectations as overly optimistic and sees competitive pressure from Juniper Networks, Inc. JNPR, whose competing spine switch became available in the fourth quarter.

The analyst predicts first quarter revenues well below consensus ($286 million vs. $304 million), with non-GAAP EPS at $0.67, well below consensus at $0.77.

Zebra Tech: Neutral, PT $69, February 23–27

Cabral anticipates fourth-quarter EPS/revenue of $1.74/$928 million versus consensus at $1.73/$931 million. For the first quarter, the analyst forecast EPS/revenue of $1.26/$840 million compared to Street estimates of $1.27/$848 million.

Amid retail headwinds, the analyst sees near-term risk from deal push outs, particularly in retail, offset by deleveraging.

“We believe that Zebra is well positioned in the industry-wide shift to Android (accounts for over 1/3rd of mobile computing) and see it as a key topline driver for the company longer-term. That said, we continue to view Android transition as a double-edged sword for Zebra, particularly in the early stages of the transition as larger deal sizes weighs on pricing and gross margins,” Cabral wrote in a note.

At Last Check

• Arista shares were up 0.67 percent at $99.42.
• NetApp shares were up 0.62 percent at $39.69.
• Zebra shares were up 0.33 percent at $85.31.