Barclays Says Nimble Storage Is 'Good Enough,' But Remains On The Sidelines

Barclays maintained its Equal-Weight rating on Nimble Storage Inc (NYSE:NMBL) despite the company reporting a solid quarter and guidance, driven by strong demand for all-flash arrays (AFA).

"We think investors can remain in the stock, but we recommend not building any outsized positions until there is greater clarity on: 1) Nimble's AFA competitive intensity risks, and 2) the company's timeline for break-even," analyst Mark Moskowitz wrote in a note.

The results were driven by AFA momentum, as the 4-month old business underpinned 17 percent of product bookings, relative to AFAs representing 8-10 percent of total storage market. The analyst pointed that the above-market contribution from AFA could expose Nimble to greater competitive intensity.

Nimble guided to revenue of $100-$103 million for the third quarter and non-GAAP operating loss of $14-$16 million, versus Barclays prior estimates of $96.8 million and loss of $14.9 million.

Overall, Nimble appears upbeat about its win rate versus incumbents such as NetApp Inc. (NASDAQ: NTAP) and also first-mover Pure Storage Inc (NYSE: PSTG).

"We think investors were expecting AFA goodness but were equally guarded that a resurgent NetApp could limit upside to Nimble's outlook," Moskowitz noted.

The analyst said the AFA momentum as well as increased cloud service provider revenue would attract investors towards Nimble as they look for companies that can be direct or secondary beneficiaries of cloud-based disruption.

Moskowitz narrowed his full-year loss view to $0.71 from $0.77 and raised his price target by $1 to $10.

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