NetApp shares came under pressure on Tueday after Bank of America/Merrill Lynch analyst Wamsi Mohan cut his rating on the stock to Neutral from Buy.

“Although we think NetApp is a high quality name with a strong management team that has the potential to be one of the long-term winners in the storage market, we are concerned with headwinds the company faces near term,” he wrote in a research note.

Mohan’s proprietary installed base model finds that “unit retirements are increasing and could pressure software attach [rates] and margins.”

Mohan notes that “near-term pricing and margin pressure will offset good expense control.”

Given the overlap of technology with potential acquirers, “the M&A premium reflected in the shares…could contract.”

Mohan sees revenue of $858 million with non-GAAP EPS of 23 cents, below the consensus at $865 million and 24 cents for the fiscal fourth quarter ending April.

He cuts his EPS forecast for next year to $1.13, from $1.26, which puts him more in line with the Street at $1.14. He did, however, lift his price target on the stock to $19, from $17.

NTAP today is down 42 cents, or 2.3 percent, to $17.53.