NEW YORK (TheStreet) -- Shares of NetApp Inc (NTAP) were gaining, higher by 1.65% to $33.65 in early market trading Wednesday, after analysts at RBC Capital Markets upgraded the provider of storage and data management software this morning.
The firm raised its rating on NetApp to "outperform" from "sector perform" while raising its price target to $38 from $35.
RBC Capital analyst believes that the recent change in CEO could be a catalyst for the stock.
The firm thinks the data management company's CEO change could unlock shareholder value, as the company's board will likely explore all possible options to drive up the stock valuation.
On June 1, NetApp announced the departure of chairman and CEO Tom Georgens who had been with the company since 2011.The company board elected George Kurian as its new CEO.
Sunnyvale, Calif.-based NetApp is a provider of storage and data management software, systems and services.
Separately, TheStreet Ratings team rates NETAPP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETAPP INC (NTAP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite currently having a low debt-to-equity ratio of 0.44, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that NTAP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.25 is high and demonstrates strong liquidity.
- Net operating cash flow has slightly increased to $396.60 million or 7.33% when compared to the same quarter last year. Despite an increase in cash flow, NETAPP INC's cash flow growth rate is still lower than the industry average growth rate of 48.85%.
- The gross profit margin for NETAPP INC is rather high; currently it is at 65.45%. Regardless of NTAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NTAP's net profit margin of 8.76% is significantly lower than the industry average.
- NETAPP INC's earnings per share declined by 27.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NETAPP INC reported lower earnings of $1.75 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($2.18 versus $1.75).
- The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues slightly dropped by 6.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: NTAP Ratings Report