NetApp Stock Plunges on Disappointing Outlook

NTAP is eyeing its worst session since 2012

Managing Editor
Nov 15, 2018 at 10:16 AM
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Shares of NetApp Inc. (NASDAQ:NTAP) are down 11.7% at $68.87 in early trading, after the company announced a fiscal second-quarter earnings beat, but disappointed with a soft third-quarter revenue forecast. Analysts have been quick to respond, with respective price-target cuts to $77 and $83 coming from Citigroup and Susquehanna, and Morgan Stanley calling for an extended slowdown in revenue growth in the second half of fiscal-year 2019. However, Morgan Stanley lifted its price target to $72 from $70.

This mixed analyst sentiment is nothing new for the tech giant. Coming into today, 11 of 21 covering firms gave NTAP a "strong buy" rating, with the remaining 10 showing a tepid "hold."

Meanwhile, recent option buyers may be cheering NetApp's earnings dip. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows NTAP with a 10-day put/call volume ratio of 1.31, ranking in the 82nd percentile of its annual range. In other words, puts have been purchased over calls at a faster-than-usual pace.

Echoing this is the stock's Schaeffer's put/call open interest ratio (SOIR), which stands at 1.43 and arrives in the 92nd percentile of its annual range. In simple terms, near-term speculators are unusually put-biased, looking at options set to expire within three months.

On the charts, NTAP touched a 17-year high of $88.08 in early September, before suffering with the broader tech sector. Now, the stock is on pace for its lowest close since June, and its worst one-day loss since 2012.

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