John - RE: "What is the new target price."
$105.
For those who don't want to get the report from the website, here it is.
I was going to highlight the good stuff, but the whole thing sounds good!
______________________________________________________________________
EQUITY RESEARCH
NETWORK APPLIANCE
JANUARY 7, 2000
NTAP: HIGHLIGHTS OF MANAGEMENT MEETING, REITERATE STRONG BUY,
RAISING REVENUE ASSUMPTIONS AND PRICE TARGET
Subject: Network Appliance (NTAP-$70 1/16)-—OTC
COMPUT
OPINION
Current: Strong Buy
Analysts: Kimberly Alexy (212) 778-1049 Prior:
Andrew Saland (212) 778-8591 Risk: High
12-Month Target Price: $105
Ind. Div.: N/A Yield: N/A Shares: 169 mil. 52-Wk.Range: 91 - 19
EPS FY Year P/E 1Q 2Q 3Q 4Q
Actual 4/99 $ 0.23A 304.6X $ 0.05 $ 0.06 $ 0.06 $ 0.07
Current 4/00 $ 0.39E 179.7X $ 0.08A $ 0.10A $ 0.10E $ 0.11E
Current 4/01 $ 0.56E 125.1X
o Yesterday, we met with management at NTAP to discuss general business
trends and outlook for 2000 and beyond.
o Management noted that North American sales in November and December were
“on fire” in what would typically be a softer growth quarter. There has been
no Y2K slowdown effect at NTAP – in fact, seemingly the reverse has happened.
o We believe it is possible that if current business trends hold, NTAP could
potentially maintain or even accelerate its 90% Y/Y growth rate posted last
quarter. We further believe margin trends may be tracking above plan with the
company's s/w and services mix in the quarter is holding surprisingly firm at
approximately 14% following the initial introduction of Snap Mirror in volume
last quarter. Still, we expect the company will reinvest any upside and are
relatively expecting in-line bottom line results.
O We believe the shares are poised to outperform once again in 2000. With an
accelerating growth environment, strong competitive positioning and solid
execution, we believe the company's 3 year growth rate will exceed our initial
expectations of 50%. We are raising our 3 year growth assumptions to 60%.
O We are also correspondingly raising our price target to $105 from $93 per
share based on 2.5X our 60% growth assumptions on the core NAS business and an
additional $31 per share in value to the caching business valued as a %
revenues. NTAP remains one of our favorite names for 2000.
NTAP Management Meeting Highlights
Yesterday, we met with management at both Network Appliance and Cache Flow to
discuss general business trends and outlook for 2000 and beyond. Key
highlights included an update on current business trends, overview of the
company's caching business and the recent changes implemented; discussion of
the NAS business, and overview of the competitive landscape. |
