NetApp Stock Upgraded Ahead Of Analyst Day

NTAP is bucking broad-market tariff headwinds

Managing Editor
Apr 4, 2018 at 9:52 AM
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While the rest of the stock market tanks on Chinese tariff concerns, NetApp Inc. (NASDAQ:NTAP) stock is up 0.6% to trade at $61.02, thanks to an upgrade to "buy" from "hold" at Pivotal Research. The analyst in coverage cited higher growth expectations for the data storage firm, and expects management to announce at least a $2.5 billion multi-year buyback program and to hike NTAP's dividend by up to 100% at tomorrow's analyst day. The brokerage firm also issued a price-target hike to $72 from $62 -- a roughly 18% premium to the stock's current perch. Separately, Loop Capital hiked its price target to $75 from $69 ahead of the analyst day.

NetApp stock has added an impressive 48% year-over-year. After touching a 17-year high of $65.58 on March 14, NTAP shares pulled back, although the drop has been contained by the shares' 100-day moving average.

Despite the upbeat analyst attention today, others remain skeptical. Of the 25 brokerages covering the equity, more than half rate it a "hold" or "strong sell." This indicates there is still plenty of room aboard the bullish bandwagon.

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 0.73 that ranks in the 87th 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 86 (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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