Tuesday, JMP Securities initiated coverage of NetApp, Inc. (NTAP) stock with a Market Perform rating. The brokerage established its 2010 operating EPS estimate of $1.38, and its 2011 estimate of $1.66.
Analyst Douglas Ireland believes there are currently several mixed catalysts for NetApp: data center infrastructure is in a refresh cycle; competition in the storage industry has never been tougher; NetApp is sitting on a cash hoard; and it is trading at a balanced risk-reward valuation with equal room for upside and downside from here, in his opinion.
The analyst said that NetApp is facing serious competition in the fastest growing market segments, like cloud service providers and enterprise virtual desktops, from the challengers in storage virtualization systems. On the positive side, trouble in the storage business among some of the largest competitors has left a hole for smaller players and created some breathing room for the other incumbents.
With $1.85 billion in net cash, the analyst believes NetApp should restart its stock buyback program, at least to offset stock compensation dilution. The analyst believes it is a good use of cash for the company to repurchase its stock. The analyst is concerned that NetApp is planning to use this war chest to carry out disruptive and distracting acquisitions. LTM free cash flow per share fell from $2.45 in October last year to a low of $1.27 last quarter but has bounced back to $1.44 in the most recent quarter for a free cash yield of 4.4%.
Currently, NTAP is down $0.87 or 2.64% and trading at $32.07.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.