NetApp (NTAP) is scheduled to report results of its fiscal fourth quarter after the market close on Wednesday, May 27, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. GUIDANCE: Along with its last report, NetApp guided for Q4 adjusted earnings per share of $1.28-$1.36 on revenue of $1.455B-$1.605B. At the time, analysts were expecting the company to report Q4 EPS of $1.39 on revenue of $1.57B, but those figures have since slipped to $1.15 and $1.43B, respectively. 2. CFO: NetApp also announced in its last report that CFO Ron Pasek informed the company of his intent to retire by the end of the fiscal year after a four-year tenure. Pasek will remain on to ensure a transition to his successor, which the company expects to name prior to the end of the fiscal year, the company said at the time. In early March, NetApp announced that appointment of former McAfee CFO Mike Berry as its next chief financial officer. 3. NORTHLAND BULLISH: In late March, Northland analyst Nehal Chokshi initiated coverage of NetApp with an Outperform rating and $49 price target. The analyst noted at the time that the company invested early in building the differentiated set of ARR Cloud Data Services, and as such, it is best positioned to help IT departments create a hybrid cloud data management fabric. Chokshi believes expectations that macro headwinds will weigh on NetApp are already embedded at current stock valuation, creating an attractive entry point for a share gainer. 4. STIFEL MORE CAUTIOUS: Meanwhile, Stifel analyst Matthew Sheerin downgraded NetApp to Hold from Buy and cut his price target on the stock to $50 from $55 earlier this month. The analyst said at the time that he sees “clear indicators” from IT distributors, resellers, and event management system providers that public and private enterprises have paused major IT infrastructure spend amid the ongoing pandemic. Given the lack of visibility into the second half of 2020 and the absence of major catalysts, shares of NetApp are likely to be range-bound, Sheerin said at the time. 5. PC MARKET: The global traditional PC market, comprised of desktops, notebooks, and workstations, declined 9.8% year over year in the first quarter of 2020, reaching a total of 53.2M shipments according to preliminary results from the International Data Corporation Worldwide Quarterly Personal Computing Device Tracker released last month. The stark decline after a year of growth in 2019 was the result of reduced supply due to the outbreak of COVID-19 in China, the world’s largest supplier of PCs. While production capacity in January was pretty much on par with past years, the extended closure of factories in February and the slow resumption of manufacturing along with difficulties in logistics and labor towards the end of the quarter led to a reduction of supply. Meanwhile, demand rose during the quarter as many employees needed to upgrade their PCs to work from home and consumers sought gaming PCs to keep themselves entertained.
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