Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, Equity Research reports, and Premium stock screens [1][2] Zacks Style Scores - Zacks Style Scores are indicators that rate stocks based on value, growth, and momentum methodologies, helping investors identify stocks likely to outperform the market in the next 30 days [2][3] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3] Value Score - The Value Style Score focuses on identifying undervalued stocks using metrics like P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Style Score assesses a company's financial health and future outlook through projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Style Score evaluates stocks based on price trends and earnings estimate changes, aiding in timing purchases of high-momentum stocks [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking attractive value, growth, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to help investors build successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.81% since 1988 [7][10] - There can be over 800 top-rated stocks available, making it essential to utilize Style Scores for better stock selection [8] Stock Analysis: NetApp (NTAP) - NetApp provides enterprise storage and data management solutions, focusing on cloud environments and technologies like AI and Kubernetes [11] - NTAP holds a 3 (Hold) Zacks Rank with a VGM Score of B and a Value Style Score of B, supported by a forward P/E ratio of 14.67 [12] - Recent earnings estimates for fiscal 2026 have been revised upward, with the Zacks Consensus Estimate increasing by $0.04 to $7.77 per share, and an average earnings surprise of +1.7% [12][13]

Core Insights - NetApp Inc's (NTAP) shares have increased by 45.5% over the past six months, lagging behind the Computer Storage Devices Industry's growth of 109.2% [1] - The Computer and Technology sector and the S&P 500 composite have risen by 45.8% and 27.5%, respectively, during the same period [1] - NTAP's stock closed at $120.31, below its 52-week high of $135.45, raising questions about potential buying opportunities [1] Price Performance - NTAP's share performance is significantly lower than the industry average, indicating potential underperformance [1] Demand and Growth Drivers - There is increasing demand for NetApp's cloud storage and AI solutions, with over 125 AI and data lake modernization deals won in the fiscal first quarter [5] - The company has expanded its AI ecosystem and launched the AIPod Mini with Intel, addressing cost and complexity challenges in AI implementation [5] - NetApp's all-flash array business has an annualized net revenue run rate of $3.6 billion, reflecting a 6% year-over-year increase [6] - Keystone storage-as-a-service revenues grew by 80% year over year, contributing to an 18% increase in Professional Services revenues to $97 million [7] - Public Cloud revenues from first-party and marketplace storage services grew by 33% in the fiscal first quarter [8] Financial Position - NetApp's cash, cash equivalents, and investments totaled $3.32 billion, with long-term debt at $2.485 billion as of July 25, 2025 [10] - The company generated net cash from operations of $673 million and free cash flow of $620 million, indicating a strong cash position [10] - NTAP returned $404 million to shareholders through dividends and share repurchases in the fiscal first quarter [11] Market Challenges - Management anticipates spending caution due to an uncertain global macroeconomic outlook, with fiscal first-quarter revenues increasing only 1% year over year [12] - The forecast for fiscal 2026 revenues is between $6.625 billion and $6.875 billion, with potential deferrals in storage cycles and infrastructure refreshes if macro conditions worsen [12] - Intense competition in the flash and cloud markets poses additional challenges [12] Valuation - NetApp's forward 12-month price-to-earnings ratio is 14.72X, which is below the industry average of 23.16X [13] Analyst Sentiment - Analysts have slightly revised earnings estimates upward for the current year, indicating a positive outlook [14] Conclusion - NetApp's strong flash portfolio, growing Keystone adoption, and partnerships with major hyperscalers are key long-term growth drivers [16] - The company's solid balance sheet and consistent shareholder returns further strengthen its investment case [16]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market engagement and confidence, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - Zacks Style Scores provide a rating system for stocks based on value, growth, and momentum, aiding investors in selecting securities likely to outperform the market in the short term [2][3] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3] Value Score - The Value Score identifies attractive stocks using financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow, focusing on undervalued stocks [3] Growth Score - The Growth Score assesses a company's financial health and future outlook, analyzing projected and historical earnings, sales, and cash flow to find sustainable growth opportunities [4] Momentum Score - The Momentum Score capitalizes on price trends, using factors like one-week price changes and monthly earnings estimate changes to identify favorable investment times [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors who utilize multiple investing strategies [6] Zacks Rank - The Zacks Rank is a proprietary model based on earnings estimate revisions, with 1 (Strong Buy) stocks historically yielding an average annual return of +23.81% since 1988, outperforming the S&P 500 [7][9] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal returns [9][10] Company Spotlight: NetApp (NTAP) - NetApp specializes in enterprise storage and data management solutions, assisting companies in managing cloud environments and adopting advanced technologies [11] - NTAP holds a Zacks Rank of 3 (Hold) with a VGM Score of B and a Growth Style Score of A, indicating a projected year-over-year earnings growth of 7.2% for the current fiscal year [12] - Recent upward revisions in earnings estimates and a positive earnings surprise average of +1.7% position NTAP as a potential growth investment [12][13]

Group 1: Stock Performance - NetApp (NTAP) closed at $118.52, reflecting a -1.13% change from the previous day, underperforming the S&P 500's daily gain of 0.26% [1] - Over the past month, NetApp shares appreciated by 6.29%, underperforming the Computer and Technology sector's gain of 7.4% but outperforming the S&P 500's gain of 2.87% [1] Group 2: Upcoming Earnings - NetApp is projected to report earnings of $1.89 per share, indicating year-over-year growth of 1.07% [2] - The Zacks Consensus Estimate for revenue is $1.69 billion, up 1.68% from the previous year [2] Group 3: Full-Year Estimates - Full-year Zacks Consensus Estimates for NetApp are earnings of $7.77 per share and revenue of $6.76 billion, representing year-over-year changes of +7.17% and +2.85%, respectively [3] - Recent changes to analyst estimates for NetApp may reflect evolving short-term business trends, with positive revisions indicating optimism about the business outlook [3] Group 4: Valuation Metrics - NetApp has a Forward P/E ratio of 15.43, which is lower than the industry average Forward P/E of 16.36, suggesting it is trading at a discount [6] - The current PEG ratio for NetApp is 2.1, which is in line with the average PEG ratio of 2.1 for Computer-Storage Devices stocks [7] Group 5: Industry Ranking - The Computer-Storage Devices industry is part of the Computer and Technology sector, holding a Zacks Industry Rank of 207, placing it in the bottom 17% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Insights - The data center industry is experiencing significant growth driven by the demand for artificial intelligence, with estimates suggesting a potential increase in global data center needs by 100 gigawatts by 2030 [2][3] - Despite the overall growth in the sector, not all companies are benefiting equally, with some facing challenges such as poor execution and heavy debt, leading to sharp declines in their stock prices [3][4] Group 1: Industry Overview - Goldman Sachs and McKinsey & Company emphasize the critical role of high-density data centers in the AI race and as foundational infrastructure for digital services [1][2] - The demand for AI capacity is rising rapidly, creating a significant opportunity for data center operators [2] - The power requirements for data centers are projected to nearly triple from 68 to 196 gigawatts in the coming years, highlighting the need for investment in power solutions [10] Group 2: Company Performance - DigitalBridge Group Inc. is one of the worst-performing data center stocks in 2025, with a year-to-date return of only 4.6%, despite being a major player in the digital infrastructure space with over $96 billion in assets [8][9] - NetApp Inc. has a year-to-date return of 3.3%, struggling to keep pace with the broader market due to competition from pure-play cloud providers, although its hybrid model remains appealing to enterprises [12][15] - Analysts have a cautious outlook on NetApp, with two-thirds holding a Neutral rating, while the company maintains a growth forecast of 2% for the next quarter and 3% for the year [13][15]

Core Viewpoint - NetApp's recent earnings report shows a slight decline in earnings year over year, but revenues have increased, indicating a mixed performance. The company remains optimistic about its future outlook and growth potential in the Hybrid and Public Cloud segments [2][3][4]. Financial Performance - Non-GAAP earnings for Q1 fiscal 2026 were $1.55 per share, beating estimates by 0.7% but declining 0.6% year over year [2]. - Revenues reached $1.56 billion, a 1% increase year over year, and exceeded the consensus estimate by 1.2% [3]. - The company expects fiscal 2026 revenues to be between $6.625 billion and $6.875 billion, reflecting a 3% year-over-year growth at the midpoint [4]. Segment Performance - Hybrid Cloud segment revenues increased 1% year over year to $1.4 billion, while Public Cloud revenues also improved 1% to $161 million. Excluding the divested Spot business, Public Cloud revenues grew 18% year over year [6]. - Within the Hybrid Cloud segment, product revenues decreased 2% to $654 million, while support contract revenues increased 3% to $647 million [7]. Key Metrics - All-Flash Array revenues rose 6% year over year to $893 million, with a total annualized run rate of $3.6 billion [9]. - Total billings increased by 4% year over year to $1.51 billion, and deferred revenues totaled $4.5 billion, up 8.6% [9]. Operating Details - Non-GAAP gross margin was 71.1%, down 110 basis points from the previous year. The Hybrid segment's gross margin was 70%, while the Public Cloud segment saw an increase to 80.1% [10]. - Non-GAAP operating income decreased 0.5% year over year to $401 million, with an operating margin of 25.7% [10]. Balance Sheet & Cash Flow - The company ended the quarter with $3.32 billion in cash and equivalents, down from $3.85 billion in the previous quarter [11]. - Free cash flow was $620 million, with a margin of 39.8%, compared to $640 million in the prior year [12]. Guidance - For Q2, NetApp anticipates revenues between $6.625 billion and $6.875 billion, with a projected non-GAAP EPS between $1.84 and $1.94 [13]. Market Sentiment - Estimates for NetApp have trended downward over the past month, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [14][17].

Company Overview - NetApp provides enterprise storage and data management software and hardware products and services, assisting enterprises in managing multi-cloud environments and adopting next-generation technologies like artificial intelligence (AI) and Kubernetes [11]. Investment Ratings - NetApp is currently rated as 3 (Hold) on the Zacks Rank, with a VGM Score of A, indicating a solid position in the market [12]. - The company has a Momentum Style Score of A, with shares increasing by 14.2% over the past four weeks [12]. Earnings Estimates - For fiscal 2026, three analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate increasing by $0.03 to $7.75 per share [12]. - NetApp has an average earnings surprise of +1.7%, suggesting a positive outlook for future earnings [12]. Investment Considerations - With a strong Zacks Rank and top-tier Momentum and VGM Style Scores, NetApp is recommended for investors' consideration [13].

Group 1 - The conference call is intended for JPMorgan clients only, and external participants are not permitted [2] - The call may be recorded and made available to clients, with potential posting on the company's website [1] - Questions during the call should be submitted in writing using the Q&A button on the Zoom toolbar [2] Group 2 - Samik Chatterjee is the designated speaker to begin the call [3]

Summary of NetApp Conference Call Company Overview - **Company**: NetApp - **CEO**: George Kurian - **Industry**: Data Storage and Cloud Services Key Points Industry Changes and Customer Preferences - The most significant change in the industry over the past decade has been the growth of public cloud services, which has influenced enterprise data center operations towards OPEX buying models [6][8] - Customers are increasingly seeking to unify their data and infrastructure models, driven by the need to do more with less, especially in the context of AI [7][9] - Traditional large integrated system vendors like Dell, HP, and IBM have been losing market share, continuing a historical trend in the storage industry [8][9] Operational Transformation - NetApp has focused on three main areas for operational transformation: portfolio, go-to-market strategy, and financial performance [10] - The company has pivoted towards growth areas such as Flash, cloud, block storage, and AI, with Flash now accounting for two-thirds of hybrid cloud revenue [10][11] - The public cloud segment has grown 33% year-over-year, contributing significantly to overall margins [11] Market Position and Competitive Landscape - NetApp is recognized as a leader in Gartner's Magic Quadrant for enterprise storage platforms, maintaining a disciplined approach to operational expenses [13] - The company aims to grow its market share in the all-Flash market, currently holding about 25% share, with aspirations to capture more [26][28] - The competitive landscape is shifting, with many clients preferring to consolidate their storage vendors, presenting opportunities for NetApp to gain share from competitors like Dell and HP [28][32] Financial Performance and Margins - Gross margins have improved from 61% to 71% during George Kurian's tenure as CEO, with a target range of 80% to 85% for the cloud business [64][65] - Operating margins have also seen significant improvement, with a disciplined approach to managing operating expenses [66] AI and Future Outlook - NetApp is well-positioned to support enterprise AI needs, focusing on high-quality, unified data for inferencing and predictive AI applications [46][47] - The company anticipates that AI will drive future growth, although the immediate benefits may be more pronounced in public cloud storage rather than on-premises solutions [49][50] - Upcoming announcements at the NetApp Insight Conference are expected to showcase new capabilities in AI and data management [47][53] Partnerships and M&A Strategy - NetApp maintains partnerships with various hypervisor vendors and is open to future collaborations, including with Nutanix [63] - The company has prioritized returning capital to shareholders over M&A, indicating a cautious approach to acquisitions in a mature market [67][68] Additional Insights - The transition to AI and cloud services is reshaping customer spending patterns, with a focus on efficiency and integration of existing data [55][56] - The company is actively working to enhance its talent pool to support its cloud services and AI initiatives, leveraging a culture of innovation [42][44] This summary encapsulates the key insights from the NetApp conference call, highlighting the company's strategic focus, market dynamics, and future growth opportunities.

Core Insights - NetApp's CFO Wissam Jabre joined the company in March 2023, bringing experience from Western Digital, Dialog Semiconductors, AMD, and Freescale [1][2] Company Overview - Wissam Jabre has a strong background in finance, having served as CFO at multiple technology firms [1] - The presentation is part of the Goldman Sachs Communacopia and Technology Conference, indicating NetApp's engagement with investors and analysts [1][2] Event Details - The fireside chat is scheduled for approximately 35 minutes, including audience Q&A, highlighting the interactive nature of the event [2] - The event marks six months since Wissam Jabre's appointment as CFO, suggesting a period of adjustment and strategic planning for the company [2]