NetApp Stock Breaks Out After Upped Guidance

No fewer than seven analysts raised their price targets today

Deputy Editor
Aug 27, 2020 at 10:29 AM
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NetApp Inc (NASDAQ:NTAP) is making moves this morning, up 7% at $45.19 at last check, one of the better stocks on the tech-rich index today. This comes after the cloud company's adjusted fiscal first-quarter earnings and revenue both toppled analyst estimates. NetApp also upped its second-quarter guidance, prompting no fewer than seven analysts to raise their price targets -- the highest from Northland Capital to $57. Evercore ISI cited heavy growth driven by new customer and workload wins, noting that the sustainability of these trends will be key. 

Today's pop has NetApp stock breaking out over the slew of moving averages convening to provide pressure at the $43 region. However, the shares seem to be running out of steam below their 160-day moving average, a trendline it hasn't traded above since early February. Down 27.2% year-to-date, the equity is eyeing its first week of gains for the month.

Given the stock's struggles, its no surprise that analysts are skeptical. On the analyst front, 13 out of the 17 in coverage sport a "hold" rating or worse rating on NetApp stock.

However, the options pits have seen an influx of calls lately. NTAP's 50-day call/put volume ratio of 2.49 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 70% of all other readings in its annual range, underscoring the larger-than-usual call-skew among options traders in the last 10 weeks.

Today is more of the same. In just the first hours of trading, 7,309 calls have crossed the tape -- 15 times what's typically seen at this point -- and 1,951 puts. Most popular is the September 50 call, while new positions are also being opened at the weekly 8/28 48-strike call. Buyers of the latter are betting on more upside for NTAP by the contract's expiration at the end of this week.


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