Citing checks that point storage industry weakness and tougher competition, Raymond James has cut NetApp (NTAP -1.6%) to Market Perform ahead of its May 21 FQ4 report. Shares are lower on an up day for tech.
RJ's downgrade comes 5 days after Wells Fargo cut its NetApp valuation range due to competitive worries - the firm is on edge over lengthening sales cycles caused by the evaluation of rival storage arrays and cloud solutions, and "the heightening trend of more workload-specific arrays." However, it still considered risk/reward to be "fairly balanced," given 40% of NetApp's market cap is covered by net cash.
NetApp slipped last month after EMC reported soft storage sales, including a 22% Y/Y drop in high-end storage sales. Since then, EMC has announced a revamp for its mid-range VNX arrays (they compete against NetApp's bread-and-butter FAS systems), as well as Project Liberty, a software solution that allows VNX arrays to be built on commodity hardware.
While NetApp trades lower, flash storage vendors Fusion-io (FIO +5%) and Violin Memory (VMEM +6.2%) are both shooting higher as Nimble Storage posts double-digit gains in response to two upgrades. Both companies went into trading close to their 52-week lows.