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Netezza Corporation (NYSE: NZ) provides data warehouse appliances. The company's Netezza Performance Server integrates database, server, and storage platforms in a purpose-built unit to enable detailed queries and analyses of stored data. The firm serves companies in telecommunications, e-business, retail, financial services, analytic services, government and healthcare. Amazon.com (NASDAQ: AMZN) is a major customer. IBM (NYSE: IBM) and Oracle (NASDAQ: ORCL) are competitors.
Netezza surprised the Street last week, when it reported Q3 EPS of four cents and revenues of $33.4 million. Analysts had
been expecting breakeven earnings and revenues of $29.4 million. The company had no outstanding debt at the end of the quarter. Management also guided FY08 revenues to about $120 million ($115.37M consensus) and FY09 revenues to about $160 million ($149.53M consensus). Needham subsequently reiterated its "buy" rating on the issue and boosted its price target to $19. NZ shares popped on the news and then moved into the initial stage of a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers now recommend the stock with one "strong buy" and six "buys." Analysts see a 28% growth rate, through the next five years. The NZ Sales Growth rate (43.97% y/y) and EPS Growth rate (-0.08 to +0.04 y/y) compare favorably with industry, sector and S&P 500 averages. Since going public in July, the stock has traded between $9.76 and $18.40. A stop-loss of $11.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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