NetApp Inc. : Good time to sell off
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02/23/2012 | 08:17am
Opinion : Bearish under 44 USD
Target price : 39 USD
Stop loss: 44.5 USD
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NASDAQ
IT Services / Consulting |
NetApp is a leading provider of unified storage solutions, which span both block and file based solutions in a single system.
In the last earnings release the company reported 3Q 2012 results in line with analysts’ estimates. For the quarter ended in January NetApp’s revenue rose 21% to $1.57 billion a year earlier. These numbers allowed company to deliver ninth consecutive quarter over 20% year over year revenue growth. Therefore, the third-quarter earnings fell 36% due principally to higher charges and weaker margins.
According to Thomson-Reuters’ consensus, the stock is worth expensive. In fact price earnings ratio for this year is estimated at 28.06; also the “enterprise value / revenue” is high with estimated coefficient for this year at 2.06. These value’s levels are making the security more expensive than industry average.
Technically, the share is close to short and mid-term resistance. This area between 43 and 44 USD could stop the bullish trend seen since early January. Also in weekly data the share is in contact with a long-term resistance at 43.42 USD. The bearish trend could allow share to fill in the gap, which is formed last November. A bullish gap is formed on the occasion of earnings releases. The proximity of resistance levels could push the share in a downward trend in order to fill in the new gap.
Both technical pattern and high value’s fundamental levels, allow us to imagine a bearish trend. We could fix the target price around 40 USD short-term support and moving average 20 periods’ area. We suggest a stop loss above 44 USD, the cross of this zone can allow to continue a bullish trend.
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Valuation |
2014e |
2015e |
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PER (Price / EPS)
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21,0x |
17,8x |
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Capitalization / Revenue
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2,01x |
1,91x |
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EV / Revenue
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1,44x |
1,34x |
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EV / EBITDA
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7,00x |
6,30x |
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Yield (DPS / Price)
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0,40% |
0,44% |
| Profitability |
2014e |
2015e |
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Operating Margin (EBIT / Sales)
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16,9% |
17,4% |
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operating laverage (Delta EBIT / Delta Sales)
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1,70x |
1,66x |
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Net Margin (Net Profit / Revenue)
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9,33% |
9,81% |
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ROA (Net Profit / Asset)
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6,65% |
7,79% |
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ROE (Net Profit / Equities)
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18,0% |
23,1% |
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Rate of Dividend
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8,45% |
7,74% |
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