Susquehanna Expects Lower NetApp Hybrid Cloud Revenue By Investing.com

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© Reuters. Susquehanna expects lower NetApp (NTAP) hybrid cloud revenue

By Sam Boughedda

Shares of NetApp (NASDAQ:) were downgraded to Neutral from Positive to Susquehanna by an analyst on Monday.

In a wide-ranging note on tech hardware stocks, the analyst said their newly introduced FY24 estimates for NetApp reflect a mid-single-digit year-over-year decline in hybrid cloud revenue, primarily due a decline in product revenues.

“The company certainly benefited from a double-digit increase in AFA revenue, up 20% year-over-year in FY22. However, we expect the growth rate to decelerate, reaching growth of 12% in FY23 and low single digit growth in FY24. We have no confidence or visibility that AFA’s growth rate will accelerate in FY24 fiscal year 25,” the analyst said.

Susquehanna also forecasts 30% year-over-year growth in public cloud revenue in FY24 for NetApp, following 55% growth in FY23.

“Despite the continued increase in Public Cloud revenue mix, it is the decline in product revenue within Hybrid Cloud that we believe is driving the Y/Y decline in FY24 revenue. As such, our FY24 EPS estimate of $5.30 also reflects a further -single digit Y/Y decline and is 12% lower than the current consensus estimate,” the analyst added.

NetApp shares are down more than 2% on Monday.

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