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Pure Storage (PSTG) Soars 108% in a Year: Will the Rally Last?
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Pure Storage, Inc (PSTG - Free Report) is continuing its upward trajectory, with a surge of 108.1% in the past year compared with the S&P 500 Composite’s 30.4% growth.
Headquartered in Mountain View, CA, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Pure Storage’s primary offerings are FlashArray and FlashBlade products, which include FlashArray//C, FlashArray//XL, FlashArray File Services, FlashBlade//S and FlashBlade//E.
The company offers its products and services on a subscription basis through Evergreen//One and Cloud Data Services. Its software offering includes Pure1, Pure Fusion and Portworx.
Image Source: Zacks Investment Research
The stock fell 13.4% from its 52-week high level of $58.46, making it relatively affordable for investors.
PSTG’s fiscal 2025 and 2026 revenues are anticipated to rise 10.5% and 14% from the year-ago levels to $3.13 billion and $3.57 billion, respectively.
The company’s earnings per share (EPS) are expected to climb 9.2% and 18.7% from the prior-year actuals to $1.55 and $1.84 in fiscal 2025 and 2026, respectively.
The Zacks Consensus Estimate for fiscal 2025 and 2026 EPS has moved up 1.3% and 8.2%, respectively, in the past 60 days, reflecting analysts’ optimism.
The long-term earnings growth rate is 17.6%. PSTG beat on earnings in each of the last four quarters, delivering an average surprise of 38.6%.
Growth Catalysts
Management expects strengthening demand trends to drive performance in the long run.
The company’s FlashBlade platform remains its major growth driver. In the last reported quarter, management highlighted that revenues from FlashBlade platform had surpassed $2 billion in total sales since launch.
Strong uptake of the latest FlashBlade//E solution bodes well. FlashBlade//E is an unstructured data repository solution for large-capacity data stores. Customers can also deploy this latest solution through a new service tier of PSTG's Evergreen//One Storage as-a-Service subscription.
Expansion of Evergreen portfolio and higher subscription services revenues are other growth catalysts. In the last reported quarter, Subscription services revenues constituted 42% of total revenues and increased 24% year over year.
Total contract value (TCV) sales for Evergreen//One and Evergreen//Flex exceeded $400 million in fiscal 2024. Driven by strong trends, TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings are forecast to be $600 million in fiscal 2025, implying 50% growth from a year ago. In fiscal 2024, PSTG clinched eight total service level agreements across its Evergreen portfolio.
An expanded customer base (especially large-enterprise clients) is aiding top-line growth. In the fourth quarter of fiscal 2024, the company acquired 349 customers including six new Fortune 500 customers. It serves more than 60% of the Fortune 500 companies.
Healthy Capital Allocation Strategy
Pure Storage has a strong balance sheet with ample liquidity position. It exited the fiscal fourth quarter that ended on Feb 4, 2024, with cash, cash equivalents and marketable securities of $1.5 billion. It had a long-term debt of $0.1 million as of Feb 4, 2024. For the fiscal fourth quarter, cash flow from operations amounted to $244.4 million compared with $158.4 million in the prior-year quarter. Free cash flow was $200.9 million compared with $113.3 million in the prior-year quarter.
Robust liquidity enables PSTG to carry out a strong shareholder return plan. In the fiscal fourth quarter, it returned $21.4 million to shareholders by repurchasing 0.6 million shares. For fiscal 2024, it returned $135.7 million to shareholders by repurchasing 4.7 million shares.
Pure Storage has $145 million left from its previously announced $250 million share repurchase plan. It also announced a new buyback authorization worth $250 million.
A Few Headwinds
Going ahead, management expects to return to double-digit revenue growth (up 10.1% to $3.1 billion) in fiscal 2025, but remains wary of the macro spending environment.
Price increases on NAND from suppliers might affect margins. Stiff competition in the flash-based storage market remains an additional headwind for this Zacks Rank #3 (Hold) stock.
The Zacks Consensus Estimate for MANH’s 2024 EPS has increased 3.6% in the past 60 days to $3.76. Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 69.1% in the past year.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS has remained unchanged at $17.89 in the past 60 days. The long-term earnings growth rate is 13%. Shares of ADBE have soared 41.6% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS is pegged at $11.63, indicating growth of 18.6% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term earnings growth rate is 16.2%. Shares of MSFT have rallied 53.1% in the past year.
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Pure Storage (PSTG) Soars 108% in a Year: Will the Rally Last?
Pure Storage, Inc (PSTG - Free Report) is continuing its upward trajectory, with a surge of 108.1% in the past year compared with the S&P 500 Composite’s 30.4% growth.
Headquartered in Mountain View, CA, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Pure Storage’s primary offerings are FlashArray and FlashBlade products, which include FlashArray//C, FlashArray//XL, FlashArray File Services, FlashBlade//S and FlashBlade//E.
The company offers its products and services on a subscription basis through Evergreen//One and Cloud Data Services. Its software offering includes Pure1, Pure Fusion and Portworx.
Image Source: Zacks Investment Research
The stock fell 13.4% from its 52-week high level of $58.46, making it relatively affordable for investors.
PSTG’s fiscal 2025 and 2026 revenues are anticipated to rise 10.5% and 14% from the year-ago levels to $3.13 billion and $3.57 billion, respectively.
The company’s earnings per share (EPS) are expected to climb 9.2% and 18.7% from the prior-year actuals to $1.55 and $1.84 in fiscal 2025 and 2026, respectively.
The Zacks Consensus Estimate for fiscal 2025 and 2026 EPS has moved up 1.3% and 8.2%, respectively, in the past 60 days, reflecting analysts’ optimism.
The long-term earnings growth rate is 17.6%. PSTG beat on earnings in each of the last four quarters, delivering an average surprise of 38.6%.
Growth Catalysts
Management expects strengthening demand trends to drive performance in the long run.
The company’s FlashBlade platform remains its major growth driver. In the last reported quarter, management highlighted that revenues from FlashBlade platform had surpassed $2 billion in total sales since launch.
Strong uptake of the latest FlashBlade//E solution bodes well. FlashBlade//E is an unstructured data repository solution for large-capacity data stores. Customers can also deploy this latest solution through a new service tier of PSTG's Evergreen//One Storage as-a-Service subscription.
Expansion of Evergreen portfolio and higher subscription services revenues are other growth catalysts. In the last reported quarter, Subscription services revenues constituted 42% of total revenues and increased 24% year over year.
Total contract value (TCV) sales for Evergreen//One and Evergreen//Flex exceeded $400 million in fiscal 2024. Driven by strong trends, TCV sales for Evergreen//One & Evergreen//Flex subscription service offerings are forecast to be $600 million in fiscal 2025, implying 50% growth from a year ago. In fiscal 2024, PSTG clinched eight total service level agreements across its Evergreen portfolio.
An expanded customer base (especially large-enterprise clients) is aiding top-line growth. In the fourth quarter of fiscal 2024, the company acquired 349 customers including six new Fortune 500 customers. It serves more than 60% of the Fortune 500 companies.
Healthy Capital Allocation Strategy
Pure Storage has a strong balance sheet with ample liquidity position. It exited the fiscal fourth quarter that ended on Feb 4, 2024, with cash, cash equivalents and marketable securities of $1.5 billion. It had a long-term debt of $0.1 million as of Feb 4, 2024. For the fiscal fourth quarter, cash flow from operations amounted to $244.4 million compared with $158.4 million in the prior-year quarter. Free cash flow was $200.9 million compared with $113.3 million in the prior-year quarter.
Robust liquidity enables PSTG to carry out a strong shareholder return plan. In the fiscal fourth quarter, it returned $21.4 million to shareholders by repurchasing 0.6 million shares. For fiscal 2024, it returned $135.7 million to shareholders by repurchasing 4.7 million shares.
Pure Storage has $145 million left from its previously announced $250 million share repurchase plan. It also announced a new buyback authorization worth $250 million.
A Few Headwinds
Going ahead, management expects to return to double-digit revenue growth (up 10.1% to $3.1 billion) in fiscal 2025, but remains wary of the macro spending environment.
Price increases on NAND from suppliers might affect margins. Stiff competition in the flash-based storage market remains an additional headwind for this Zacks Rank #3 (Hold) stock.
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Manhattan Associates (MANH - Free Report) , Adobe (ADBE - Free Report) and Microsoft (MSFT - Free Report) . While Manhattan Associates sports a Zacks Rank #1 (Strong Buy), Adobe and Microsoft carry a Zacks Rank of 2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MANH’s 2024 EPS has increased 3.6% in the past 60 days to $3.76. Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 69.1% in the past year.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS has remained unchanged at $17.89 in the past 60 days. The long-term earnings growth rate is 13%. Shares of ADBE have soared 41.6% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS is pegged at $11.63, indicating growth of 18.6% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term earnings growth rate is 16.2%. Shares of MSFT have rallied 53.1% in the past year.