Investing.com -- Bank of America upgraded NetApp Inc (NASDAQ:NTAP) stock to "Neutral" from "Underperform" and raised its price target to $128 from $121, citing margin upside, free cash flow generation, and a growing total addressable market driven by AI and public cloud demand.
BofA highlighted improving macro conditions and strength in the all-flash array market, stable gross margins in the 71-72% range, and operating margin expansion toward NetApp’s long-term target of over 30%.
The firm noted that NetApp’s FCF margin stood at 24% in fiscal 2024, with a long-term target of 20% through fiscal 2027, supported by strong capital returns.
While noting the positive trends, BofA sees limited upside to consensus estimates, prompting the Neutral stance. Risks to its call include potential gross margin headwinds, increased competition, and leadership transitions.
“Our Neutral rating is based on increasing TAM, share gains in All-Flash market, stable Gross Margins, and Operating Margin growth offset by risks of a more competitive storage market, increasing NAND pricing headwinds, weaker mix of products,” analyst at BofA said.
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