Sienna on rise NetApp on downside-JPMorgan analysis
2022.12.20 12:30
Sienna on rise NetApp on downside-JPMorgan analysis
Budrigannews.com – Analysts at JPMorgan cut NetApp (NASDAQ:) to Neutral from Overweight, and Ciena (NYSE:) was raised. to Overweight from Neutral in a Tuesday note to customers.
They stated that the company downgraded NetApp due to its “balanced by the headwinds faced by the company” opinion of the company’s distinct cloud offerings and leadership in AFA for on-premises solutions.
“Moderation in Enterprise IT spending, optimization of storage budgets, limited share gains compared to prior with the resurgence of the storage portfolios of incumbents, and most importantly absence of consistency of execution” are some of the obstacles in the way.
“We continue to anticipate that Storage will continue to deliver at the high end of growth expectations for hardware product segments; however, we continue to see downside risks from the combination of a decrease in spending and an adverse currency impact on top-line growth.” According to the analysts, “we see limited catalysts for a re-rating while potential for downside risks to estimates remains top-of-mind for investors.” NetApp shares are trading at an inexpensive multiple of 11x in comparison to historical multiples.
“The long-term drivers of a high-quality business with technology leadership in the optical market with high barriers to entry, combines with the near-term drivers of resilience through an elevated backlog and still robust demand trends from customers,” the analysts stated when referring to Ciena.
“We believe that moderated demand across the board should help in access to supply, which together should support the elevated growth expectations in FY23. However, we remain cautious relative to supply, which has been a challenge up until recently.”
With robust investments in wireline capex from service providers, access layer investments from cable/broadband, and datacenter investments from hyperscalers, Ciena’s recently issued 3-year growth targets, which call for revenue growth of 10% to 12%, are representative of the company’s secular demand drivers,” the analysts stated.
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“In addition to the aforementioned, the 5G build-out in India and share gain opportunities in Europe from Huawei displacements remain upside drivers, implying robust earnings growth in the medium term.”
