SUNNYVALE, Calif. (
Wednesday reflect the growing strength of storage stocks as companies reopen their corporate coffers.
Last month, for example,
Wall Street's estimates, and there are high hopes for switch maker
, which reports on Tuesday.
"The excellent results from storage vendors NTAP and EMC add to our belief thatBrocade will announce good results next week," wrote Kaushik Roy, an analyst at Wedbush, in a note released Thursday. "Storage spending is on the rise."
With companies wrestling with ever-growing volumes of data, it makes sense that storage is one of the first areas to reap the benefits of an IT-spending rebound, a fact that boosted NetApp's results.
The storage maker, which partners with virtualization giant
, doubled its profit in a fast-improving business environment. NetApp also grew its sales 9% sequentially.
"The economy continues to show increased stabilization, and the predictability of our close rates continues to improve," said Steve Gomo, the NetApp CFO, during a conference call late Wednesday. NetApp's public sector and European businesses were both strong during the quarter, he added.
NetApp also issued bullish third-quarter guidance of $935 million to $955 million, well above analysts' estimate of $921.59 million. Excluding items, the company expects earnings of 36 to 37 cents a share. Analysts surveyed by Thomson Reuters have predicted earnings of 36 cents a share.
The numbers were not completely out of the blue. NetApp
its first guidance for nine months during its recent
, signaling a much-improved IT spending environment.
"We view NetApp as an attractive vehicle to gain exposure to one of the few remaining secular growth markets today (enterprise storage)," wrote Brian Marshall, an analyst at Broadpoint AmTech, reiterating his buy rating. "It is our view NetApp will continue to gain share in enterprise storage as market adoption of virtualization accelerates in future."
Paul Mansky, an analyst at Canaccord Adams, also maintained his NetApp buy rating Thursday and raised his price target from $30 to $34.
"The company's compelling proposition in server virtualization is resonating well with customers -- both traditional and next generation (cloud providers)," he wrote. "We believe NetApp is building momentum on the back of company-specific and secular demand drivers."
NetApp is clearly confident of its ability to increase the pressure on rivals such as
. Newly appointed
Tom Georgens, for example, promised that the firm will be aggressively partnering.
"I want to basically be in a position that outside of EMC stronghold accounts we do more business with
than EMC does," he said on the call. "The goal that I have given our team is that I want to form the same relationship with Cisco that we have with VMware."
NetApp also expects increasing third-quarter sales through its partner
, according to Gomo.
The storage specialist's shares rose 84 cents, or 2.84%, to $30.46 Thursday, outpacing the broader decline in tech stocks that saw the Nasdaq fall 1.99%.
Brocade is expected to post sales of $521.09 million and earnings of 13 cents a share when it reports its fourth-quarter results on Tuesday before market open.
-- Reported by James Rogers in New York