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NetApp (NTAP) & DreamWorks Renew Strategic Collaboration

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NetApp (NTAP - Free Report) recently announced an extension of its strategic collaboration with DreamWorks Animation. The two companies had first partnered in 2018.

NetApp will continue to be DreamWorks’ cloud data services provider. Notably, the studio generates nearly a petabyte of data for every movie.

The animation studio will be using NetApp’s on-premises and cloud solutions to strengthen its hybrid cloud environment and boost productivity. The co-engineering partnership will allow DreamWorks to leverage the engineering talent of NetApp as well to resolve engineering problems related to improving workflows in a hybrid cloud environment and simultaneously reducing latency.

By using NetApp’s AFF solutions, DreamWorks will be able to boost performance in high-performance computing environments and migrate data with higher efficacy to NetApp StorageGrid.

DreamWorks will also be gaining more agility by extending applications to the cloud with the help of Azure NetApp Files and NetApp Cloud Volumes ONTAP. This will also expand geographic reach and support distributed resources. Using NetApp’s ONTAP systems solution, the studio will be able to lower latency requirements and boost data center efficiency.

NetApp provides enterprise storage, data management software, and hardware products and services. The company’s performance is being affected by a weak IT spending environment. Increased budget scrutiny, especially cloud cost optimization, amid macroeconomic turbulence and forex volatility acted as a dampener.

NetApp now expects fiscal 2024 revenues to decline in the low-to-mid single-digits range on a year-over-year basis. However, management believes that these are temporary headwinds and expects IT spending to rebound in time.

The company remains well-poised to gain from data-driven digital and cloud transformations. Frequent product launches and secular trends in Artificial Intelligence and high-performance computing bodes well. Extensive cost discipline measures and the company’s dividend and share repurchase activity are noteworthy. NetApp recently announced a new additional $1 billion share repurchase authorization.

At present, NetApp carries a Zacks Rank #3 (Hold). The stock has gained 22.5% compared with the sub-industry’s growth of 43% in the past year.

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Stocks to Consider

Some better-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Watts Water Technologies (WTS - Free Report) and Blackbaud (BLKB - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 2% in the past 60 days to $3.59 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have risen 33.3% in the past year.

The consensus mark for Watts Water’s 2023 earnings is pegged at $7.27 per share, up 1.1% in the past 60 days. The long-term earnings growth rate is anticipated to be 8%.

Watts Water’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 16.3%. Shares of WTS have increased 46.4% in the past year.

The consensus estimate for Blackbaud’s 2023 earnings is pegged at $3.75 per share, up 1.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 21.9%.

Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 10.4%. Shares of BLKB have improved 33.2% in the past year.

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