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Here's How NetApp (NTAP) is Placed Ahead of Q4 Earnings

NetApp Inc NTAP is slated to release fourth-quarter fiscal 2024 earnings on May 30.

The company projects non-GAAP earnings per share (EPS) to be between $1.73 and $1.83 for the quarter. The Zacks Consensus Estimate is pegged at $1.80, suggesting an increase of 16.9% from the year-ago.

Net revenues are anticipated in the range of $1.585-$1.735 billion. The Zacks Consensus Estimate is pegged at $1.66 billion, implying a 5.1% increase from the prior-year.

NTAP beat estimates in each of the last four quarters, delivering an average earnings surprise of 12.3%.

NetApp, Inc. Price and EPS Surprise

NetApp, Inc. Price and EPS Surprise
NetApp, Inc. Price and EPS Surprise

NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote

Factors to Note

Management expects momentum in all-flash products and hyperscaler first-party and marketplace services to drive the top-line performance in the fiscal fourth quarter. NetApp now expects fiscal 2024 revenues to be in the band of $6.185-$6.335 billion.

The company is gaining from data-driven digital and cloud transformations involving business analytics, artificial intelligence, data security and application modernization.

Frequent product launches, extensive cost discipline, strengthening go-to-market activities and various cloud collaborations remain other major positives.

Expanded all-flash products portfolio is likely to have boosted the Hybrid Cloud business. Strong demand for the recently launched ASA product suite of SAN-optimized high-performance and capacity-oriented all-flash arrays is another tailwind. Our estimate for Hybrid Cloud’s fiscal fourth-quarter revenues is pegged at $1,507.9 million, indicating a rise of 5.4% from year ago.

Amid rising cybersecurity risks, the company’s advanced portfolio of ransomware protection solutions is likely to gain traction.

Softness in subscription services might have weighed on the Public Cloud segment’s top-line performance. For the fiscal fourth quarter, NetApp expects annualized recurring revenues or ARR headwind of $20 million from unrenewed subscriptions. Management further added that this will have a minimal revenue impact and will be mostly offset by growth in first-party and marketplace services.

Our estimate for Public Cloud revenue is pegged at $151.2 million, up 0.1% from the prior-year actuals.

However, weakness in global macroeconomic conditions, softening IT spending environment and cloud cost optimization efforts by clients remain concerning.

Also, unfavorable forex movements, high interest rates and price increases on NAND from suppliers are likely to have hurt its earnings.

What Our Model Says

Our proven model does not predict an earnings beat for NTAP. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

NTAP has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Abercrombie & Fitch Co ANF has an Earnings ESP of +2.53% and is set to announce quarterly figures on May 29. ANF currently has a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ANF’s to-be-reported quarter’s earnings and revenues is pegged at $1.66 per share and $952.3 million, respectively. Shares of ANF have risen 401.4% in the past year.

The Gap, Inc GPS has an Earnings ESP of +15.47% and presently carries a Zacks Rank #1. GPS is slated to release quarterly numbers on May 30.

The Zacks Consensus Estimate for GPS’ to-be-reported quarter’s earnings and revenues is pegged at 14 cents per share and $3.28 billion, respectively. Shares of GPS have gained 151.6% in the past year.

Dell Technologies Inc DELL has an Earnings ESP of +2.30% and currently carries a Zacks Rank #2. DELL is scheduled to report quarterly earnings on May 30.

The Zacks Consensus Estimate for DELL’s to-be-reported quarter’s earnings and revenues is pegged at $1.25 per share and $21.7 billion, respectively. Shares of DELL have surged 230.2% in the past year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar

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