Factors to Note Ahead of NetApp's (NTAP) Q2 Earnings Release
NetApp NTAP is slated to release second-quarter fiscal 2024 earnings on Nov 28.
The company projects fiscal second-quarter non-GAAP earnings per share (EPS) to be between $1.35 and $1.45. The Zacks Consensus Estimate is pegged at $1.40, suggesting a 5.4% decline from a year ago.
Net revenues are anticipated in the range of $1.455-$1.605 billion. The Zacks Consensus Estimate is pegged at $1.53 billion, implying an 8% dip year over year.
NTAP beat estimates in each of the last four quarters, delivering an average earnings surprise of 9.2%.
NetApp, Inc. Price and EPS Surprise
NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote
Factors to Note
NetApp’s performance in the to-be-reported quarter is likely to have been affected due to weakness in global macroeconomic conditions, softening IT spending environment and cloud cost optimization efforts by clients.
Also, unfavorable forex movements, volatile supply-chain dynamics, increases in freight and logistical expenses are expected to have acted as headwinds.
Nonetheless, the company’s performance is likely to have benefited from data-driven digital and cloud transformations involving business analytics, artificial intelligence, data security, and application modernization.
Frequent product launches, extensive cost discipline, strengthening go-to-market activities and various cloud collaborations remain major positives.
The Hybrid Cloud business is likely to have gained from healthy uptake of ASA (All-Flash SAN Array) A-Series. Strong demand for AFF (All-Flash Array) C-Series and AFF A150 series is likely to have acted as a tailwind. Our estimate for hybrid cloud products is pegged at $1,372.4 million, indicating a year-over-year fall of 9.8%.
Softness in subscription services might have weighed down on the Public Cloud Services business’ top-line performance. However, momentum in first-party and marketplace consumption services is likely to have provided some cushioning. Our estimate for public cloud products is pegged at $156.9 million, reflecting a year-over-year rise of 10.5%.
Recent Developments
On Nov 9, 2023, NetApp announced the renewal of its partnership with Microsoft. The two companies in collaboration offer clients innovative solutions for cloud storage with Azure NetApp Files NetApp BlueXP, Cloud Volumes ONTAP and newly added CloudOps solutions from Spot by NetApp.
On Nov 7, 2023, NetApp announced the new NetApp StorageGRID for VMware Sovereign Cloud solution. The new solution will aid users in storing and safeguarding of unstructured data at lower costs while adhering to data privacy and residency regulations worldwide.
On Oct 16, 2023, NetApp recently unveiled a new Bare-Metal-as-a-Service (BMaaS) solution, NetApp Storage on Equinix Metal, in collaboration with Equinix. The BMaaS solution is fully integrated with Equinix Metal's infrastructure, thereby providing a unified full-stack experience for storage (file, block and object), compute and networking as-a-service for a single subscription. The solution will offer low-latency interconnection to all major public clouds, whereby the environment (on-premises, in the cloud, or anywhere in between) can be either single tenant or dedicated, noted NetApp.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for NetApp this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, this is not the case here.
NetApp has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.
Snowflake SNOW has an Earnings ESP of +67.33% and a Zacks Rank #2. SNOW is set to report third-quarter fiscal 2024 results on Nov 29. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SNOW’s to-be-reported quarter’s EPS and revenues is pegged at 16 cents and $710.5 million, respectively. Shares of SNOW have surged 14% in the past year.
Genasys GNSS has an Earnings ESP of +21.74% and a Zacks Rank #2. GNSS is scheduled to release fourth-quarter fiscal 2023 numbers on Dec 7.
The Zacks Consensus Estimate is pegged at a loss of 8 cents per share. The consensus estimate for revenues is pegged at $10.14 million. The stock has lost 47% of its value in the past year.
Academy Sports and Outdoors ASO has an Earnings ESP of +1.75% and a Zacks Rank #2. ASO is slated to post third-quarter fiscal 2023 results on Nov 30.
The Zacks Consensus Estimate for ASO to-be-reported quarter’s EPS and revenues is pegged at $1.65 and $1.46 billion, respectively. Shares of ASO have declined 7.3% in the past year.
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NetApp, Inc. (NTAP) : Free Stock Analysis Report
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