NetApp, Inc NTAP is slated to release third-quarter fiscal 2025 earnings on Thursday.
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The company expects non-GAAP earnings per share to be between $1.85 and $1.95 for the quarter. The Zacks Consensus Estimate is pegged at $1.90 per share, indicating a decline of 2.1% from the year-ago level.
Net revenues are anticipated in the range of $1.61-$1.76 billion. The Zacks Consensus Estimate is pegged at $1.69 billion, implying a 5.2% increase from the prior-year level.
NTAP beat estimates in three of the trailing four quarters, delivering an average earnings surprise of 6.5%. It matched the consensus estimate for the remaining quarter.
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The stock has lost 6.1% against the Computer Storage Devices growth of 1.2% in the past six months.
Factors to Note Ahead of NTAP’s Q3 Earnings
Continued demand from customers for NetApp’s portfolio of modern all-flash arrays, especially the C-series capacity flash and ASA block-optimized flash bodes well. Momentum in the new all-flash A-series is likely to have acted as a tailwind. These enterprise storage products will allow users to boost workloads including traditional enterprise applications and Gen AI.
The company expects the new AFF A-series, along with its C-series and ASA products to have captured further share in the all-flash market. Also, Keystone’s storage-as-a-service offering has been gaining significant traction, with revenues increasing more than 55% year over year in the last reported quarter.
Our estimate for Hybrid Cloud’s fiscal third-quarter revenues is pegged at $1.514 billion, indicating a rise of 4.1% from the year-ago level.
NetApp, Inc. Stock Price and EPS Surprise
NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote
The company has been gaining from data-driven digital and cloud transformations involving business analytics, artificial intelligence, data security and application modernization. In the fiscal first quarter, the company won more than 100 AI and data lake modernization deals.
Solid momentum in hyperscaler first-party and marketplace storage services has been driving revenues from the Public Cloud. In the last reported quarter, Public Cloud segment’s revenues improved 9% to $168 million, driven by 43% increases in first-party and marketplace cloud storage services. Driven by strength in the cloud storage business, NetApp now expects cloud revenues to have returned to double-digit growth year over year from the fiscal third quarter. Our estimate for Public Cloud revenues is pegged at $171.3 million, up 13.4% from the prior-year actual.
Strengthening go-to-market activities, adding new capabilities to existing products and various cloud collaborations remain as other major positives.
Margin performance is likely to have gained from a favorable product mix and operating discipline. Though NTAP expects product gross margins to decline slightly in the second half of fiscal 2025 compared with the first half but remain in the high 50% range for the full year.
However, volatile global macroeconomic conditions, cautious IT spending environment and cloud cost optimization efforts by clients remain concerning
What Our Model Says About NTAP Earnings
Our proven model predicts an earnings beat for NTAP this time around. 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 exactly the case here.
NTAP has an Earnings ESP of +1.40% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are three other stocks you may want to consider, as our model shows that these, too, have the right elements to post an earnings beat in this reporting cycle.
Kimbell Royalty Partners, LP KRP currently has an Earnings ESP of +24.32% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KRP is scheduled to report quarterly earnings on Feb. 27. The Zacks Consensus Estimate for KRP’s to-be-reported quarter’s bottom line is pegged at 19 cents. The consensus estimate for revenues is pegged at $80.3 million. Shares of KRP have gained 2.4% in the past year.
Main Street Capital Corporation MAIN presently has an Earnings ESP of +3.10% and a Zacks Rank #2. MAIN is scheduled to report quarterly numbers on Feb. 27. The Zacks Consensus Estimate for MAIN to-be-reported quarter’s earnings and revenues is pegged at $1.05 per share and $141.4 billion, respectively. Shares of MAIN have gained 35.6% in the past year.
Intellia Therapeutics, Inc. NTLA has an Earnings ESP of +35.03% and a Zacks Rank #2 at present. NTLA is scheduled to report quarterly figures on Feb. 27. The Zacks Consensus Estimate for NTLA’s to-be-reported quarter’s bottom line is pegged at a loss of $1.32. The consensus estimate for revenues is pegged at $8.8 million. Shares of NTLA have lost 56% in the past year.
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NetApp, Inc. (NTAP) : Free Stock Analysis Report
Main Street Capital Corporation (MAIN) : Free Stock Analysis Report
Intellia Therapeutics, Inc. (NTLA) : Free Stock Analysis Report
Kimbell Royalty (KRP) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
