Barclays downgrades NetApp stock rating on valuation concerns

Barclays has lowered its rating on NetApp stock to Equalweight from Overweight, citing valuation concerns. The bank set a price target of $219.00, which is below the current trading price of $239. Barclays points to the stock's 123% year-to-date gain as a factor in its downgrade decision. The company's shares have surged this year, trading near its 52-week high of $240.87 and representing a 127% year-to-date return.

Despite the sharp rise, Barclays believes NetApp is overvalued relative to its Fair Value, making it one of the most overvalued stocks in its portfolio. The firm highlights NetApp's cloud business, which accounts for 10% of total sales and has been growing at approximately 20% year-over-year with gross margins exceeding 85%. NetApp's overall gross margin is 71%.

The storage provider offers storage solutions as a service on all three major hyperscaler platforms and generates a significant portion of its revenue from recurring contracts. While Barclays sees upside in the storage industry in the second half of 2026 due to NAND pricing, it expects normalization next year. NetApp provides both all-flash arrays and hybrid arrays with disc storage for cost-effective options.

Analysts have been updating NetApp's stock rating and setting new price targets recently. Evercore ISI upgraded NetApp to Outperform, citing a positive growth outlook and setting a $300 price target. Wells Fargo maintained an Equal Weight rating with a $190 target after attending NetApp's INSIGHT Investor Event, where discussions focused on metadata bottlenecks, AI outcomes, and changing deployment sizes.

BofA Securities increased its price target to $220, maintaining a Neutral rating, following NetApp's 2026 INSIGHT event, which emphasized the company's AI portfolio expansion.