NetApp Shares Slide After Analyst Slashes Rating to Sell

NetApp is battling tough competition in the enterprise storage market from Hewlett Packard Enterprise, Pure Storage, Dell and Nutanix.
By Scott Van Voorhis ,

Shares of NetApp  (NTAP) - Get Report stumbled Monday after a top analyst downgraded the cloud-based services company's stock to sell.

NetApp's stock price fell 3.86% to $60 after Citigroup analyst Jim Suva rolled back his rating on the company's shares to sell from neutral, while also cutting the price target to $55 from $67.

In explaining his decision to downgrade NetApp's stock, Suva cited increased competition from other enterprise storage vendors. NetApp is battling for market share with Hewlett Packard Enterprise HPE, Pure Storage  (PSTG) - Get Report , Dell Technologies  (DELL) - Get Report and Nutanix (NTNX) - Get Report .

NetApp's stock price has underperformed the market in recent weeks. With earnings per share of $1.22, the company missed fourth-quarter analysts' earnings estimates by 3 cents, according to Zacks.

While NetApp's first-quarter numbers should meet Wall Street expectations, Suva sees ramped up competition eroding the tech company's margins by the second quarter.

NetApp controlled 6.7% of the enterprise storage systems market at the end of the first quarter, according to Zacks, which cited stats collected by IDC. That represented a gain of 0.5% for the company which is behind only Dell and HPE in this crucial market segment.

NetApp is also three notches above Pure Storage, which came in No. 6 in terms of market share, with 2.2%.

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