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NETAPP INC. (NTAP)

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Analysis summary4-Traders Strategies 

NetApp Inc. : Good time to sell off

02/23/2012 | 08:17am
Opinion : Bearish under USD 44
Target price : USD 39
Stop loss: USD 44.5
NASDAQ
Computer Hardware
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.
NetApp Inc. : NetApp Inc. : Good time to sell off
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Financial Ratios

Size 2015e 2016e
Capitalization 13 715 M$ -
Entreprise Value (EV) 11 833 M$ 11 269 M$
Valuation 2015e 2016e
PER (Price / EPS) 21,4x 18,7x
Capitalization / Revenue 2,16x 2,10x
EV / Revenue 1,86x 1,73x
EV / EBITDA 8,11x 7,34x
Yield (DPS / Price) 1,41% 1,53%
Profitability 2015e 2016e
Operating Margin (EBIT / Sales) 18,2% 18,8%
operating Leverage (Delta EBIT / Delta Sales) - 2,28x
Net Margin (Net Profit / Revenue) 10,3% 10,9%
ROA (Net Profit / Asset) 8,59% 9,12%
ROE (Net Profit / Equities) 23,8% 26,6%
Rate of Dividend 30,1% 28,5%
Balance Sheet Analysis 2015e 2016e
CAPEX / Sales   3,89% 3,81%
Cash Flow / Sales (Taux d'autofinancement) 21,3% 22,2%
Capital Intensity (Assets / Sales) 1,19x 1,19x
Financial Leverage (Net Debt / EBITDA) -1,29x -1,59x
Income Statement Evolution
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