- Believing there's now less than 6% downside to shares, Pac Crest's Brent Bracelin has upgraded NetApp (NTAP +0.6%) to Sector Weight.
- Bracelin: "We estimate free cash flow could bottom at $65 million to $75 million in July, which would be the lowest level in six years on lower operating profits, restructuring costs and working capital outlays. However, this should mark the bottom, followed by a meaningful snap back to normalized levels in October on tight cost controls, even assuming further declines in branded storage."
- In the wake of NetApp's May FQ4 miss and soft guidance, Bracelin is cutting his FY16 (ends April '16) EPS estimate to $1.72, below a $2.11 consensus. However, he declares further downside risk to EPS estimates "now appears nominal," given NetApp's history of quickly cutting costs during downturns.
- NetApp fell 12% between Braceline's May 11 downgrade to Underperform, and today's upgrade.