雅虎香港財經 Pure Storage (PSTG) Surges 76.1% YTD: Will the Rally Last?
Pure Storage, Inc’s PSTG shares have been performing well on the trading front, with a gain of 76.1% year to date compared with 14.6% growth of the S&P 500 composite.
Solid financial performance is driving a good run on the trading front. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 24.99%.
The stock is still down 10.8% from its 52-week high level of $70.41.
Headquartered in Mountain View, CA, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers. Its 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.
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Growth Catalysts
Pure Storage’s performance has been gaining from higher sales to new and existing enterprise customers across the data storage platform. In the first quarter of fiscal 2025, PSTG added more than 262 new customers. At the end of the quarter, the company’s customer count stood at more than 12,000, including 61% of the Fortune 500 companies.
The company’s FlashBlade platform remains its primary growth driver. 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 the Evergreen portfolio and higher subscription revenues are other growth catalysts. In the last reported quarter, Subscription services revenues (49.9% of total quarterly revenues) of $346.1 million rose 23.5% on a year-over-year basis.
Moreover, management noted that rapid advances in AI technology are opening up several market opportunities for Pure Storage in various market segments like the high-performance data storage market for large public or “private GPU farms”. The other market opportunities include increasing demand for specialized storage for enterprise Inference engines environments, along with a requirement to upgrade all enterprise storage to perform as a storage cloud environment.
To capitalize on the AI opportunity, PSTG has made a strategic investment in visual AI tech company, LandingAI. The investment is aimed at boosting the advancement of AI vision models.
Robust Outlook
Going ahead, management expects strengthening demand trends to drive its top-line growth. Revenues for fiscal 2025 are anticipated to be $3.1 billion, which indicates a 10.5% rise from fiscal 2024.
Total contract value (TCV) sales for Evergreen//One & Evergreen//Flex subscription service offerings are forecast to be $600 million for fiscal 2025, which implies 50% growth from a year ago. TCV sales for Evergreen//One and Evergreen//Flex exceeded $400 million in fiscal 2024.
For the second quarter fiscal 2025, Pure Storage expects revenues to be $755 million, implying an increase of 9.6% from a year ago.
The non-GAAP operating income for the fiscal second quarter is expected to be $125 million. The non-GAAP operating margin is expected to be 16.6%.
Healthy Capital Allocation Strategy
Pure Storage has a strong balance sheet with ample liquidity position. It exited the fiscal first quarter that ended May 5, 2024, with cash, cash equivalents and marketable securities of $1.7 billion. The company had a long-term debt of $0.1 million as of May 5.
Cash flow from operations amounted to $221.5 million in the fiscal first quarter compared with $173.3 million in the prior-year quarter. Free cash flow was $172.7 million compared with $121.8 million in the prior-year quarter. Robust liquidity and cash flow reflect that the company is making investments in the right direction.
Estimate Revision Activity
The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues is pegged at $3.13 billion and $3.56 billion, respectively, indicating growth of 10.6% and 13.6% from the year-ago levels.
The consensus estimate for fiscal 2025 and 2026 EPS is expected to rise 14.8% and 18.8%, respectively, from the prior-year actuals to $1.63 and $1.94.
The consensus mark for fiscal 2025 and 2026 EPS has increased 2.5% and 2.6%, respectively, in the past 60 days, reflecting analysts’ optimism.
Headwinds Persist
Management remains concerned about the volatile macroeconomic backdrop. Price increases on NAND from suppliers might affect margins. Intensified 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 NVIDIA Corporation NVDA, Arista Networks ANET and Woodward WWD, currently sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 EPS is pegged at $2.68, up 12.1% in the past 60 days. NVIDIA’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 18.4%. The long-term earnings growth rate is 37.6%. Shares of NVDA have risen 190.7% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.92, up 5.7% in the past 60 days. The long-term earnings growth rate is 16.1%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.4%. Shares of ANET have gained 118.3% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has increased 11.6% in the past 60 days to $5.88. WWD earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 26.1%. The long-term earnings growth rate is 16.5%. Shares of WWD have risen 57.1% in the past year.
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