Swap Your EMC Shares For NetApp, Says J.P. Morgan Analyst

J.P. Morgan analyst Mark Moskowitz this morning is advising investors in IT infrastructure stocks to swap out of EMC (EMC) and into NetApp (NTAP).

• EMC: He downgrades the stock to Neutral from Overweight, trimming his price target to $21, from $22. “EMC has been our supertanker stock since October 2008, and we continue to think the stock is a core holding for long-term investors,” he writes. “We do not see, however, a lot of upside potential to top- and bottom-line growth this year and next. Secular shifts to the midrange and increasing competition in virtualized environments could limit EMC�s upside potential. We think these factors, along with the increasingly discounted VMware stub, stand to keep shares of EMC trading more in line with the peer group, which is why we are moving to Neutral.”
• NTAP: Moskowitz upgradesto Overweight, from Neutral, with a new target of $41, up from $36.50. “Near-term business fundamentals continue to improve, and we believe that secular shifts should favor NetApp the rest of this year and next,” he writes. “In networked storage, we now prefer shares of NetApp to EMC. In our view, NetApp’s revenue growth potential of 20%-plus will have few rivals and is built on the company’s improving attach rates to virtualization environments, the secular shift to the midrange, and increasing traction in NetApp�s direct/indirect sales channels.”

This morning:

• EMC is down 61 cents, or 3.4%, to $17.45.
• NTAP is down 40 cents, or 1.2% to $32.

17.45 -0.61 (-3.38%)