Shares of Pure Storage (PSTG) slumped about 13% premarket on Wednesday after its third quarter results, while analysts had mixed views.
Wells Fargo kept its Overweight rating on Pure’s stock with a $100 price target.
“While we think PSTG is trading lower on the view that they missed the upside bogey expectations + no incremental hyperscale announcements, we think the company’s hyperscale opportunity/traction is progressing and would be buyers on weakness,” said analysts led by Aaron Rakers.
Morgan Stanley maintained its Equal-weight rating but lowered the price target to $83 from $90.
“PSTG’s results show clear outperformance vs. legacy storage peers, but the stock is already priced as such. Hyperscale shipment upside is a positive; however, possible mix shift to subscription and cont’d investment intensity limit earnings flowthrough in FY27,” said Erik Woodring and his team of analysts.
The analysts noted that it was a solid quarter with modest top and bottom line upside and clear evidence of share gains as growth materially outpaced legacy storage peers. Hyperscale shipments exceeding 1-2 Exabytes, or EBs, this year is a positive, but still not much clarity on unit economics and the company’s management signaled evaluating new business models, the analysts added.
“We believe PSTG has more pricing power vs. peers and therefore should see less relative headwinds from memory inflation, which is likely just a pass-through,” said Woodring and his team. “Investment intensity to continue into FY27 but mgmt [management] also soft-guiding margin expansion in FY27 – higher opex in FY27 is where our model changes the most.”
Evercore kept its Outperform rating and $105 price target on Pure’s stock.
Analysts led by Amit Daryanani said that Pure reported a “solid topline beat and raise,” with October-quarter print coming in at $964.5M/$0.58 versus street at $956M/$0.58 consensus and they provided a January-quarter guide ahead of street expectations as well, implying revenues to sustain year-over-year acceleration.
“Sticking with our OP rating and $105 target as we think PSTG is positioned to sustain mid-teens sales and high-teens EPS growth on a structural basis,” said Daryanani and his team.
Related stocks: NetApp (NTAP) was largely flat, while Hewlett Packard Enterprise (HPE) and Dell Technologies (DELL) rose about 1% each premarket on Wednesday.