We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why You Should Hold on to Pure Storage (PSTG) Stock for Now
Read MoreHide Full Article
Shares of Pure Storage Inc. (PSTG - Free Report) have been performing well of late. If you haven't taken advantage of the share price appreciation yet, its time you hold the stock in your portfolio as it looks promising and is poised to carry the momentum ahead.
Shares of Pure Storage, which provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers, have returned 40.7% in a year, substantially outperforming the industry's growth of 20.9%.
What's Going in Favor of Pure Storage?
Pure Storage is rapidly gaining traction in the flash storage market, as evident from its expanding customer base. In the third quarter, the company added more than 300 customers, bringing the total base to 4,000 organizations and reflecting an increase of 54% from the year-ago quarter.
Notably, the company’s cloud customers contributed around 25% to business while existing customers contributed 70%. The company’s strong product portfolio with the likes of FlashArray and FlashBlade business segments was the key catalyst. Additionally, its data platform for cloud is gaining traction.
Management is optimistic about its scalable storage solutions in an era where the world is typically being driven by big-data, artificial intelligence (AI) and data analytics based information. The company is currently focusing on three major aspects, namely increasing cloud customer base, solidifying the position of its next generation workload related core data infrastructure and tapping large enterprises as they “cloudify” their on-premise IT infrastructure.
Management is also positive about the company’s partner ecosystem, which assisted it in winning a multimillion dollar deal with a prominent financial services institution.
The company stated that the storage market for AI is likely to witness CAGR of 78% over the next five years. Pure Storage is well poised to grab the opportunity. Further, its partnership with NVIDIA, which is a dominant player in AI related computation, is anticipated to be a positive.
Notably, the company delivered a positive earnings surprise of 66.7% in the last quarter.
Risks Prevail
However, Pure Storage faces intensifying competition in the flash-based storage market from the likes of Hitachi, NetApp, Dell EMC, HP Enterprise, Lenovo and IBM.
The competition has resulted in a decline in the average selling price (“ASP”). Any decline in ASP will impact the results if shipments do not improve considerably. This will eventually hurt top-line growth going forward.
Our Take
We expect the aforementioned factors to help the company sustain its strong momentum and stay afloat in difficult times. Hence, we suggest that investors hold on to the stock at the moment.
NVIDIA, Western Digital and Analog Devices have a long-term earnings growth rate of 10.3%, 25.1% and 10.4%, respectively.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Why You Should Hold on to Pure Storage (PSTG) Stock for Now
Shares of Pure Storage Inc. (PSTG - Free Report) have been performing well of late. If you haven't taken advantage of the share price appreciation yet, its time you hold the stock in your portfolio as it looks promising and is poised to carry the momentum ahead.
Shares of Pure Storage, which provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers, have returned 40.7% in a year, substantially outperforming the industry's growth of 20.9%.
What's Going in Favor of Pure Storage?
Pure Storage is rapidly gaining traction in the flash storage market, as evident from its expanding customer base. In the third quarter, the company added more than 300 customers, bringing the total base to 4,000 organizations and reflecting an increase of 54% from the year-ago quarter.
Notably, the company’s cloud customers contributed around 25% to business while existing customers contributed 70%. The company’s strong product portfolio with the likes of FlashArray and FlashBlade business segments was the key catalyst. Additionally, its data platform for cloud is gaining traction.
Management is optimistic about its scalable storage solutions in an era where the world is typically being driven by big-data, artificial intelligence (AI) and data analytics based information. The company is currently focusing on three major aspects, namely increasing cloud customer base, solidifying the position of its next generation workload related core data infrastructure and tapping large enterprises as they “cloudify” their on-premise IT infrastructure.
Management is also positive about the company’s partner ecosystem, which assisted it in winning a multimillion dollar deal with a prominent financial services institution.
The company stated that the storage market for AI is likely to witness CAGR of 78% over the next five years. Pure Storage is well poised to grab the opportunity. Further, its partnership with NVIDIA, which is a dominant player in AI related computation, is anticipated to be a positive.
Notably, the company delivered a positive earnings surprise of 66.7% in the last quarter.
Risks Prevail
However, Pure Storage faces intensifying competition in the flash-based storage market from the likes of Hitachi, NetApp, Dell EMC, HP Enterprise, Lenovo and IBM.
The competition has resulted in a decline in the average selling price (“ASP”). Any decline in ASP will impact the results if shipments do not improve considerably. This will eventually hurt top-line growth going forward.
Our Take
We expect the aforementioned factors to help the company sustain its strong momentum and stay afloat in difficult times. Hence, we suggest that investors hold on to the stock at the moment.
Zacks Rank & Key Picks
Pure Storage carries a Zacks Rank #3 (Hold).
NVIDIA Corporation (NVDA - Free Report) , Western Digital Corporation (WDC - Free Report) and Analog Devices, Inc. (ADI - Free Report) are some better-ranked stocks in the same sector. All the three companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA, Western Digital and Analog Devices have a long-term earnings growth rate of 10.3%, 25.1% and 10.4%, respectively.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>