NTAP is down about 3% after earnings. I guess there was some projections investors didn’t like.
This is a cross-post from NPI, but I think NTAP’s report was bullish for PSTG. Here’s my thoughts:
This might just be confirmation bias so please, talk some sense into me.
I think PSTG has better products in the high-growth markets. They also have been partnered and benefiting from their relationship with NVDA longer. NetApp just inked a partnership, but I have not seen the level of commitment from NVDA to Netapp that I have from NVDA to PSTG.
“Two weeks ago, NetApp announced a partnership with Nvidia (NVDA) to create solutions for AI/deep learning workloads that pair Nvidia’s DGX servers – they pack high-end Nvidia GPUs used for AI training – with NetApp’s AFF A800 flash array. When asked about the tie-up, Kurian asserted the deal expands NetApp’s addressable market; he noted IDC expects the total market for AI storage solutions to be worth $5 billion next year, and to grow at a 39% compound annual rate over the next few years.”
It’s also being priced and traded generally the same as Netapp. I think investors are missing the thesis here and I believe there’s significant upside if/when they report strong earnings.
Thanks, Austin. This makes me happy too, so I’m sure there’s confirmation bias in there for both of us. But it is good to remember that Pure has made some great partnerships and really seem to be leading the way in their industry. We would expect those to continue bearing fruit – and it does seem like Wall Street is skeptical or just hasn’t totally caught on.
We’ll find out more next week when PSTG reports earnings (on 8/21 after markets close).
What sold me on PSTG, or got me off the fence, was reading the resume of the new CEO Charlie Giancarlo.
I was on the fence because I wanted to see margins improve at a faster rate.
Looking at his resume, he had his choice of many companies to lead. He would only have left Silver Lake Partners for the right company, and he felt Pure Storage was it.
He has been on the job about a year now, so expecting this quarter to be good.
NTAP is down about 3% after earnings. I guess there was some projections investors didn’t like.
If you listened to the earnings call, there were some numbers that the analysts may have failed to understand properly at first pass (those darn algos). Changes to revenue reporting, especially based on the new 606 reporting rules that change how extended lease and other longer-term revenue is recognized, which also required a re-state of all of last fiscal year’s (FY18) numbers. Which, in turn, probably broke all of the analyst models. Which then caused humans to follow suit.
I expect NTAP will recover nicely and continue to climb, because they reported great numbers (which you shared above) – another EPS beat, revenue growth up 20% (and all-flash array up 50%), better margins, higher FCF, increased share buyback, etc.
I see $90 on the horizon for NTAP… And probably good things for PSTG as well.