Morgan Stanley Just Raised Its Price Target On NTAP By 55% – So Why Does It Believe The Rpsk/Reward Is Skewed?

• Wells Fargo stated that the company’s better-than-expected fourth-quarter results and FY27 outlook justify a positive reaction in the stock.
• Barclays updated its model on the stock post NetApp’s fourth-quarter earnings.
• NetApp reported fourth-quarter revenue of $1.95 billion, beating analysts’ expectations of $1.87 billion.

Shares of NetApp Inc. (NTAP) were on track to hit record highs premarket on Friday after the company reported blockbuster quarterly earnings, and retail sentiment turned ‘extremely bullish’ on the stock. But even after raising its target price, Morgan Stanley warned that the risk/reward remains "skewed".

At the time of writing, NTAP stock was up over 17% in early premarket trading on Friday.

MS Keeps A Cautious Stance On NTAP

Morgan Stanley analyst Erik Woodring raised NetApp’s price target to $137 from $88, representing a potential upside of 55% from analysts’ previous price target and kept an ‘Underweight’ rating on the stock, according to TheFly.

Woodring stated that even though it was a strong beat/raise quarter, the second half projections, margin trajectory, unclear share shifts, and stock trading near record highs kept the risk/reward ‘skewed.’

Some Wall Street Analysts Turn More Bullish 

On the other hand, Wells Fargo stated that the company’s better-than-expected fourth-quarter results and FY27 outlook justify a positive reaction in the stock. The firm noted that, heading into earnings, even after the strong move in the stock, investor sentiment was fairly negative, with a focus on gross margin pressures amid component price inflation.

Wells Fargo also raised NetApp’s price target to $180 from $115 and kept an ‘Equal Weight’ rating on the stock. 

Barclays has updated its model post NetApp’s fourth-quarter earnings. The firm raised its price target on the stock to $199 from $120 while keeping ‘Overweight’ rating on the shares.

NTAP Q4 Earnings

It was a record quarter for the company.

NetApp reported fourth-quarter revenue of $1.95 billion, beating analysts’ expectations of $1.87 billion while adjusted earnings came in at $2.43 per share, surpassing Wall Street expectations of $2.27, according to Fiscal.ai data.

The company guided full year 2027 revenue in the range of $7.325 billion to $7.575 billion, while adjusted earnings for the same period is expected to be $8.70 per share to $9.00 per share.

What Retails Thinks About NTAP

The retail sentiment surrounding the stock has improved to ‘extremely bullish’ from ‘bullish’ while message volumes increased to ‘extremely high’ from ‘high’ over the past 24 hours.

The retail chatter on NTAP also shot up more than 560% in the past 24 hours.

One user on Stocktwits mentioned NTAP as a ‘high potential’ stock for upward movement.

https://stocktwits.com/Kesiya/message/654735831

NetApp Inc shares have gained over 35% year-to-date.

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