NetApp (NTAP) investor concerns about the company's margins tied to higher memory costs ahead of fiscal Q3 earnings on Thursday are "somewhat overdone," Wedbush said in a Wednesday note.

The company lifted its pricing at the end of fiscal Q3 and this is expected to offset a major portion of the margin pressure related to higher component costs, while also creating a near-term sales tailwind, Wedbush said.

The analysts said their conversations suggest that most of NetApp's customers are moving forward deals despite higher prices due to their requirements and the probability that prices will rise further in the future.

Noting NetApp's lack of traction in artificial intelligence deals as a potential headwind, Wedbush said that with enterprise storage spending growing at modest levels, the company needs more deals in this area with neoclouds, sovereign data center builds to show more substantial longer-term growth.

The firm rated NetApp as neutral with a $115 price target.

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