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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
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

© 2012

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Financial Ratios

Size 2015e 2016e
Capitalization 10 943 M$ -
Entreprise Value (EV) 9 202 M$ 9 047 M$
Valuation 2015e 2016e
PER (Price / EPS) 19,3x 17,6x
Capitalization / Revenue 1,77x 1,77x
EV / Revenue 1,49x 1,46x
EV / EBITDA 6,77x 6,57x
Yield (DPS / Price) 1,88% 2,04%
Price to book (Price / BVPS) 3,08x 2,96x
Profitability 2015e 2016e
Operating Margin (EBIT / Sales) 17,2% 17,2%
operating Leverage (Delta EBIT / Delta Sales) -3,35x 1,00x
Net Margin (Net Profit / Revenue) 9,89% 10,4%
ROA (Net Profit / Asset) 8,73% 8,83%
ROE (Net Profit / Equities) 24,9% 25,6%
Rate of Dividend 36,2% 35,8%
Balance Sheet Analysis 2015e 2016e
CAPEX / Sales   3,25% 3,53%
Cash Flow / Sales (Taux d'autofinancement) 19,3% 21,1%
Capital Intensity (Assets / Sales) 1,13x 1,17x
Financial Leverage (Net Debt / EBITDA) -1,28x -1,38x
Income Statement Evolution
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EPS Revisions
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