NetApp (NTAP) stock sank late Thursday after the enterprise data storage company reported mixed fiscal third quarter results. Earnings were in-line while sales were below expectations. Guidance also came in below Wall Street analysts consensus view.
NetApp said that it earned an adjusted $1.91 per share on sales of $1.64 billion for the Jan. 26-ended quarter. Analysts polled by FactSet earlier projected the San Jose, Calif.-based company would post adjusted earnings of $1.91 per share on sales of $1.7 billion.
↑ X NOW PLAYING How Big Of A Threat Does DeepSeek's Disruption Pose To AI, Energy And Utility Stocks?Earnings decreased 1% year over year while sales increased 2%.
"The strength of our business model yielded operating margin ahead of and EPS in-line with expectations, despite Q3 top line performance below our standards," Chief Executive George Kurian said in a news release. "We are taking action to enhance our execution and improve our momentum. I remain confident in our position as the supplier of choice for AI and other data-driven workloads and our ability to achieve our long-term financial goals and deliver increasing shareholder value."
For the current quarter, NetApp guided for sales of $1.73 billion, based on the midpoint of its range. NetApp stock analysts were previously projecting $1.76 billion in sales for the April-ending quarter, according to FactSet. Meanwhile, NetApp said it expects adjusted earnings of $1.89 per share, based on the midpoint of its range. Wall Street was looking for $2 per share, according to FactSet.
On the stock market today, NetApp stock is down more than 12% at 103 in recent after-hours action.
Founded in 1992, NetApp offers a storage hardware and software platform for enterprises.
Prior to posting its results, NetApp stock fell 5% in regular trading. Its rival Pure Storage (PSTG) tumbled after reporting earnings late Wednesday. While Pure Storage beat top- and bottom-line estimates, its gross margins and profit outlook missed views.
Investors are watching for signs that data storage services companies will see a boost in growth from AI-related demand. But NetApp's sales growth slowed from 6% in its October-ended quarter to 2% with the January quarter.
In prepared remarks published on NetApp's website, Kurian said the company remains "well-positioned" for AI and other data-driven workloads.
"First-party and marketplace cloud storage services and AI were bright spots in the quarter," Kurian wrote. "We had line of sight to achieve our sales targets until the end of Q3 when inconsistent execution resulted in some deals slipping out of the quarter."
He added that some of those deals have closed.
Not including Thursday's slide, NetApp shares have gained 2% so far this year and 38% in the past 12 months.
The stock had formed a consolidation pattern with a 135.45 buy point, according to IBD MarketSurge.
Coming into the report, NetApp stock had an IBD Composite Rating of 89 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, NetApp's IBD Relative Strength Rating was 79 out of 99. The RS Rating means that NetApp has outperformed 79% of all stocks in IBD's database over the past year.
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