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Factors to Note Ahead of NetApp's (NTAP) Q3 Earnings Release

NetApp NTAP is slated to release third-quarter fiscal 2024 earnings on Feb 29.

The company projects fiscal third-quarter non-GAAP earnings per share (EPS) to be between $1.64 and $1.74. The Zacks Consensus Estimate is pegged at $1.69, suggesting an increase of 23.4% from the year-ago levels.

Net revenues are anticipated in the range of $1.51-$1.67 billion. The Zacks Consensus Estimate is pegged at $1.59 billion, implying a 4.4% increase from the prior-year levels.

NTAP beat estimates in each of the last four quarters, delivering an average earnings surprise of 9.8%.

NetApp, Inc. Price and EPS Surprise

NetApp, Inc. Price and EPS Surprise
NetApp, Inc. Price and EPS Surprise

NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote

Factors to Note

Management expects momentum in product, and hyperscaler first-party and marketplace services to drive revenues.

The company is gaining from data-driven digital and cloud transformations involving business analytics, artificial intelligence, data security and application modernization.

Frequent product launches, extensive cost discipline, strengthening go-to-market activities and various cloud collaborations remain major positives.

The Hybrid Cloud business is likely to have gained from a healthy uptake of the ASA (All-Flash SAN Array) C-Series. Strong demand for AFF (All-Flash Array) C-Series and AFF A150 series is likely to have acted as a tailwind. Our estimate for Hybrid Cloud revenue is pegged at $1,430.9 million, indicating a rise of 4% from a year ago.

Softness in subscription services might have weighed down on the Public Cloud segment’s top-line performance. Our estimate for Public Cloud revenue is pegged at $158.7 million, reflecting a rise of 5.8% from the prior-year actuals.

However, weakness in global macroeconomic conditions, softening IT spending environment and cloud cost optimization efforts by clients remain concerning.

Also, unfavorable forex movements and volatile supply-chain dynamics are expected to have acted as additional headwinds.

What Our Model Says

Our proven model does not predict an earnings beat for NTAP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

NTAP has an Earnings ESP of 0.00% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time around.

The Gap, Inc GPS has an Earnings ESP of +24.44% and a Zacks Rank #1. GPS is scheduled to report fourth-quarter fiscal 2023 earnings on Mar 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GPS’ to-be-reported quarter’s revenues is pegged at $4.21 billion. The consensus estimate for EPS is pegged at 19 cents.

The TJX Companies, Inc TJX has an Earnings ESP of +1.52% and a Zacks Rank #3. TJX is set to post fourth-quarter fiscal 2024 results on Feb 28.

The Zacks Consensus Estimate for TJX’s to-be-reported quarter’s revenues is pegged at $16.2 billion. The consensus estimate for EPS is pegged at $1.12.

Six Flags Entertainment Corporation SIX has an Earnings ESP of +21.85% and carries a Zacks Rank #2. SIX is slated to release fourth-quarter 2023 numbers on Feb 29.

The Zacks Consensus Estimate for SIX’s to-be-reported quarter’s EPS and revenues is pegged at 27 cents and $298.4 million, respectively.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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