Has NetApp Growth Peaked? (NTAP)

Shares of NetApp are soft on what is a strong market day elsewhere in technology after a boutique firm called FBN Securities downgraded the stock.  This brokerage and research firm is a relatively unknown firm to Main Street, but the new rating went down to “Market Perform” from a prior “Outperform” based upon the notion that channel checks from the analyst are signalling weaker sales and growing fears of competition coming in the months ahead.

After a $42.02 close on Tuesday, the stock is still well off of last year’s highs as the 52-week trading range is $33.00 to $56.49.  After a 2.7% drop to $40.90 so far today, Yahoo! Finance still lists a market capitalization rate of $14.8 billion.  NetApp is often considered the storage stock that was always too expensive to acquire for another big player and it is likely now too valuable on a raw dollar basis.

Thomson Reuters had a consensus target of $2.38 EPS on $6.22 billion in projected fiscal April-2012 sales, with those targets rising to $2.73 EPS and $6.95 billion in sales for the following fiscal year.  The multiples are not expensive, but the raw dollar figure of nearly $15 billion in addition to whatever premium the company might want would lower the chances of this company being acquired.

It is surprising to see such a negative reaction from a boutique firm’s downgrade but such is life on some days.

JON C. OGG