NetApp's Better Product Gross Margins in Fiscal Q2 'Unexpected', Wedbush Says

MT Newswires Live11-26

NetApp's (NTAP) fiscal Q2 results and guidance were mostly in line with expectations, except for the 550 basis points sequential increase in product gross margins, which was "unexpected," Wedbush Securities said in a note Wednesday.

This helped the company surpass the previous margin and earnings per share outlook, with management anticipating the improvement to last through the current fiscal year, analysts Matt Bryson and Antoine Legault wrote.

Modest gross margin gains are expected to continue through the rest of the fiscal year as implied by the slightly higher fiscal Q3 guidance and increased fiscal 2026 outlook, according to the note.

Analysts said, however, they were less certain on the sustainability of gains considering potential component cost headwinds in fiscal 2027.

Wedbush raised NetApp's price target to $115 from $110, while maintaining its neutral rating on the stock.

Shares of the company were up 5.8% in recent Wednesday premarket activity.

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