NetApp Shares Surge on Revenue Beat

Analyst firm R.W. Baird maintained its outperform rating on the company, in a note on Thursday. "We remain positive on shares of NetApp following modest upside to the quarter," wrote analyst Jayson Noland. "[We] are encouraged with NetApp's cost/operating margin focus."

Noland, acknowledging the expected decline in IT budgets, lowered his NetApp price target from $24 to $20.

Despite solid revenue growth, NetApp saw a decline in second-quarter profit to $49 million, or 15 cents a share, from $84 million, or 23 cents a share, in the year-ago quarter.

NetApp officials noted a significant slowdown in business during September following Lehman Brothers' bankruptcy, although storage sales rebounded in October.

The company also cited strong growth from its channel partners during the second quarter, notably from Arrow and Avnet (AVT Quote), which contributed almost a quarter of NetApp's revenue.