NetApp shares jump on sales beat

NEW YORK, USA: Shares of NetApp Inc rose about 10 per cent in premarket trade Thursday, after the data storage equipment maker posted quarterly sales modestly ahead of Wall Street expectations, following two quarters of trailing sales.

The data storage equipment maker said on Wednesday, year-end corporate spending had been stronger than anticipated, but cautioned that it had seen weakness from US military agencies, a large customer group.

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At least four brokerages raised their price targets on the company's stock.

J.P. Morgan, which has an 'overweight' rating on the stock, said it expects NetApp to benefit from favorable trends in the storage space that would boost its shares in the near term.

The brokerage raised its price target by $4 to $50.

NetApp's stock has underperformed the overall market over the past six months, as investors worried about weak sales and increasing competition from rival EMC Corp.

EMC, whose sales have exceeded estimates in its two most-recent quarters, saw its stock rising about 18 per cent during the same period. The Nasdaq Composite Index .IXIC has gained about 16 per cent.

RBC Capital Markets, which also raised its price target on NetApp shares by $4 to $52, said it expects the company to gain from easing hard drive issues and wider adoption of its new operating system ONTAP 8.1.

BMO Capital Markets and Wedbush Securities also raised their price targets on NetApp stock.

NetApp shares, which have gained about 21 per cent in value since hitting a year low on October 4, touched a high of $43.65 before the bell. They closed at $39.88 on Wednesday on the Nasdaq.