NetApp Stock Boosted By Bullish Brokerage Note

Piper Jaffray predicts 17-year highs ahead for NTAP shares

Managing Editor
Mar 23, 2018 at 9:57 AM
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NetApp Inc. (NASDAQ:NTAP) stock is higher today, up 1.7% at $63.21, after Piper Jaffray raised its price target to $72 from $60 -- territory not charted in 17 years. After meeting with management, the analyst in coverage believes the software firm is well-positioned to take advantage of next-generation technologies, and upped his revenue and gross margin estimates. 

Although currently on track for second straight weekly loss, it's been an excellent run lately for NetApp stock. The equity has added more than 50% year-over-year and hit a 17-year high of $65.58 on March 14. The shares have relied on support from their 80-day moving average, which has contained the last two pullbacks. 

Despite the stock's long term technical strength, analysts have been slow to come aboard. Of the 24 brokerages covering NTAP, 12 still rate the shares a "hold" or "strong sell." Furthermore, the stock's average 12-month price target of $63.82 is within pennies of the stock's current perch. This implies there is ample room for upgrades and more price-target hikes for the software name.

Near-term options traders, however, are more put-heavy than usual. This is according to NetApp's Schaeffer's put/call open interest ratio (SOIR) of 0.84 that ranks in the 93rd percentile of its annual range. This indicates that while call open interest still outweighs put open interest on an absolute basis, looking at options expiring within three months, there is still a heavier-than-normal amount of short-term puts open relative to calls.

Regardless of whether it's calls or puts, NetApp stock has consistently rewarded premium buyers over the past year, based on its elevated Schaeffer's Volatility Scorecard (SVS) reading of 87 (out of 100). In other words, NTAP has tended to make outsized moves in the last 12 months, relative to what the options market has priced in.



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