(Reuters) - Data storage equipment maker NetApp Inc’s (NTAP.O) gloomy first-quarter forecast, driven by worries over weak demand in Europe and fiercer competition, prompted brokerages to cut their rating and price target on the stock.
Shares of the company fell as much 13 percent to a more than two-year low of $28.45 in early trading on Thursday. The stock was the top percentage loser on the Nasdaq.
“We remain concerned that the weakness may be prolonged given the volatile situation in Europe,” Wedbush Securities analysts, including Rohit Chopra, said in a note.
A sizeable amount of NetApp’s sales come from Europe, where a debt crisis has shaken confidence in the economy and policy-makers fear Greece could pull out of the euro zone.
“We still believe storage is one of the stronger end markets even though trends in Europe and public segments are discouraging,” Barclays Capital analyst Ben Reitzes said.
The company also faces stiff competition from EMC Corp EMC.N, which is coming out with new products in the July quarter.
“We believe NetApp remains competitively challenged versus its larger, pure-play competitor EMC, which has materially increased its channel partner presence over the past year,” ThinkEquity analyst Rajesh Ghai said.
RBC Capital Markets downgraded the stock to “sector perform” from “outperform”, while Brean Murray Carret & Co cut its rating to “hold” from “buy”.
Reporting by Chandni Doulatramani in Bangalore; Editing by Maju Samuel