Bank of America Securities analyst Wamsi Mohan reiterated a Hold rating on Pure Storage (PSTG – Research Report) today and set a price target of $42.00.
Wamsi Mohan has given his Hold rating due to a combination of factors that include the overall enterprise storage market conditions and Pure Storage’s specific financial projections. The enterprise storage market is showing signs of recovery, but growth expectations might be overly optimistic. Mohan acknowledges the potential for Pure Storage’s revenue growth to range between 8.5% and 15.5% year-over-year, factoring in market growth, the company’s performance, and headwinds from their transition to a subscription-based revenue model. He anticipates that the upcoming fiscal guidance may reflect a conservative growth rate, closer to 10%, due to higher expected headwinds. The Balance between the benefits of a higher SaaS revenue mix and next-generation Flash products against risks such as a weaker macro environment and the transition to ratable revenues underpins the Hold rating.
Additionally, while market demand for storage is anticipated to stabilize in 2024, growth is expected to remain modest. Pure Storage is likely to continue outperforming the market, but there are specific challenges, including the transition to the Evergreen//One model and the impact of Telco deals. These factors could limit revenue growth. Mohan’s report does not include potential revenue increases from engagements with hyperscalers or from META, signaling cautious optimism without factoring in these possible upsides. The revised price objective of $42 reflects adjustments to revenue and earnings per share estimates for FY25, while maintaining the same multiple on expected sales. This careful analysis suggests that while there are positive aspects to Pure Storage’s business, there are also risks and uncertainties that warrant a neutral stance, hence the Hold rating.
In another report released on February 14, Stifel Nicolaus also assigned a Hold rating to the stock with a $41.00 price target.
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Pure Storage (PSTG) Company Description:
Pure Storage, Inc. engages in the provision of flash-based storage solutions. Its technology replaces storage systems designed for mechanical disk with all-flash systems optimized end-to-end for solid-state memory. The company was founded by John Hayes and John Colgrove in October 2009 and is headquartered in Mountain View, CA.
Read More on PSTG:
- Pure Storage put volume heavy and directionally bearish
- DA Davidson technology analysts hold an analyst/industry conference call
- Pure Storage downgraded to Hold from Buy at Stifel
- Pure Storage price target raised to $51 from $47 at KeyBanc
- Pure Storage call volume above normal and directionally bullish
