On Thursday, storage-appliance maker NetApp, Inc. (NASDAQ:$NTAP) saw its shares fall 5%. What happened? It seems that the analysts were weighing in on the company’s better-than-expected Q1 earnings hit a cautious tone.
The California-based company surpassed its own Q1 earnings projections as well as those of analysts polled by FactSet. Executives said Q1 net income came in at $136 million (49 cents a share) on revenue of $1.33 billion, which is up 2% from the 2016 quarter. Excluding stock-based compensation and various other items, NetApp brought in 62 cents a share, which is a 35% gain over a year ago.
What were people expecting for Q1? Analysts had forecast earnings of 37 cents a share, and sales of $1.32 billion. Meanwhile, Netapp had predicted earnings to be between the range of 30 cents to 38 cents per share. For second quarter sales guidance, NetApp issued it a range of $1.31 billion to $1.46 billion, and FactSet analysts forecasted sales of $1.37 billion.
Regardless of the beat, NetApp stock still dropped in after-hours trade Wednesday, which continued into Thursday’s trading session. Analysts are happy with the numbers in the report, but they remain wary about growing competition and the future of the company.
“The company has clearly turned the corner, but we see increased competition in the next year from a currently under-performing Dell EMC and a preoccupied Hewlett Packard Enterprise Co.,” said Steven Milunovich, a UBS analyst.
All things considered, if you’re looking to purchase computer hardware stocks, you might want to leave NetApp out of your investment portfolio for a while.
Featured Image: Depositphotos/© jamdesign
