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.
Pure Storage (PSTG) to Price Senior Notes Worth $450 Million
Read MoreHide Full Article
Pure Storage Inc. (PSTG - Free Report) recently announced plans of offering $450 million of convertible senior notes in a private placement.
The interest rate, conversion rate and certain other terms of the notes are yet to be determined.
Shares of this Zacks Rank #3 (Hold) stock have gained 89.2% in the past year, substantially outperforming the industry’s rally of 25.6%.
Delving into the Headlines
The notes will be offered to qualified institutional buyers only, and in accordance with Rule 144A under the Securities Act of 1933, as amended. The company will also give the initial purchasers of the notes an option to buy up to an additional $67.5 million aggregate principal amount of the notes to cover any over allotment.
Interest on the notes will be paid semi-annually and mature in 2023, subject to customary closing conditions.
In connection with the pricing of the notes, Pure Storageexpects to enter into more convertible note hedge transactions with the initial purchasers or their affiliates if required.
The company also anticipates utilizing certain portion of the net proceeds to pay the cost of the capped call transactions. The remaining net proceeds will be used for working capital, general corporate purposes and to repurchase up to $20 million of shares of its Class A common stock.
Cash Position
The enhanced capital deployment reflects Pure Storage’s strong balance sheet and confidence in long-term business prospects. The company exited the year ended Jan 31, 2018 with cash and cash equivalents of $183.7 million.
Positive free cash flow for the full-year ended Jan 31, 2018 was reported for the first time in the company’s history at $7.7 million, compared with ($61.2 million) fiscal 2017. This can be attributed to strong performance in the quarter and employee stock purchase worth $11.5 million in the fourth quarter of fiscal 2018.
We believe that the company has a strong balance sheet, which will help it in capitalizing on investment opportunities and pursuing strategic acquisitions, further improving growth prospects. Moreover, the senior notes offering will lower its cost of capital, consequently strengthening balance sheet and supporting growth.
Bottom Line
The company’s strong product portfolio including the likes of FlashArray, FlashStack and FlashBlade business segments aid in bolstering the top line. Additionally, the company’s data platform for cloud is gaining traction.
Pure Storage continues to focus 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.
Applied Materials, NVIDIA and Western Digital have a long-term expected EPS growth rate of 13.26%, 10.25% and 19%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Pure Storage (PSTG) to Price Senior Notes Worth $450 Million
Pure Storage Inc. (PSTG - Free Report) recently announced plans of offering $450 million of convertible senior notes in a private placement.
The interest rate, conversion rate and certain other terms of the notes are yet to be determined.
Shares of this Zacks Rank #3 (Hold) stock have gained 89.2% in the past year, substantially outperforming the industry’s rally of 25.6%.
Delving into the Headlines
The notes will be offered to qualified institutional buyers only, and in accordance with Rule 144A under the Securities Act of 1933, as amended. The company will also give the initial purchasers of the notes an option to buy up to an additional $67.5 million aggregate principal amount of the notes to cover any over allotment.
Interest on the notes will be paid semi-annually and mature in 2023, subject to customary closing conditions.
In connection with the pricing of the notes, Pure Storageexpects to enter into more convertible note hedge transactions with the initial purchasers or their affiliates if required.
The company also anticipates utilizing certain portion of the net proceeds to pay the cost of the capped call transactions. The remaining net proceeds will be used for working capital, general corporate purposes and to repurchase up to $20 million of shares of its Class A common stock.
Cash Position
The enhanced capital deployment reflects Pure Storage’s strong balance sheet and confidence in long-term business prospects. The company exited the year ended Jan 31, 2018 with cash and cash equivalents of $183.7 million.
Positive free cash flow for the full-year ended Jan 31, 2018 was reported for the first time in the company’s history at $7.7 million, compared with ($61.2 million) fiscal 2017. This can be attributed to strong performance in the quarter and employee stock purchase worth $11.5 million in the fourth quarter of fiscal 2018.
We believe that the company has a strong balance sheet, which will help it in capitalizing on investment opportunities and pursuing strategic acquisitions, further improving growth prospects. Moreover, the senior notes offering will lower its cost of capital, consequently strengthening balance sheet and supporting growth.
Bottom Line
The company’s strong product portfolio including the likes of FlashArray, FlashStack and FlashBlade business segments aid in bolstering the top line. Additionally, the company’s data platform for cloud is gaining traction.
Pure Storage continues to focus 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.
Key Picks
Some better-ranked stocks in the broader technology sector include Mellanox Technologies, Ltd. , NVIDIA Corporation (NVDA - Free Report) and Western Digital Corporation (WDC - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials, NVIDIA and Western Digital have a long-term expected EPS growth rate of 13.26%, 10.25% and 19%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>