How Analysts View Pure Storage After Its Quiet Period

Technology

Published: November 2, 2015 11:35 am

Last Updated: January 13, 2020 5:39 pm

Pure Storage Inc. (NYSE: PSTG) quietly entered the market in its early October initial public offering (IPO). The company priced 25 million shares at $17, within the expected range of $16 to $18. There was an overallotment option for an additional 3.75 million shares, which closed on October 22. The quiet period has now ended, and underwriters and analysts alike can now issue calls on Pure Storage.

24/7 Wall St. has addressed some of Monday’s other top analysts calls as well.

The company’s innovative technology replaces storage systems designed for mechanical disk with all-flash systems optimized end-to-end for solid-state memory. At the same time, its innovative business model replaces the traditional forklift upgrade cycle with an evergreen storage model of hardware and software upgrades and maintenance.

The next-generation storage platform and business model are the result of the team’s substantial experience in enterprise storage and Web-scale infrastructure, as well as frustration with the industry’s status quo. This deep industry understanding led to the development of its three-part integrated platform: the Purity Operating Environment, its flash-optimized software, FlashArray, its modular and scalable all-flash array hardware, and Pure1, its cloud-based management and support.

The platform can deliver a 10X acceleration in business applications over legacy disk-based storage. It is also designed to be compatible with existing infrastructure, substantially more reliable and power and space efficient.

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Pure Storage delivers data storage with an increase in performance and with lower complexity and lower costs. Revenue growth and financial disclosures were as follows:

Revenue increased from $6.1 million for the fiscal year ended January 31, 2013, to $42.7 million for the fiscal year ended January 31, 2014, and to $174.5 million for the fiscal year ended January 31, 2015, representing year-over-year revenue growth of 603% and 308% for its two most recent fiscal years.
Revenue increased from $24.6 million for the three months ended April 30, 2014, to $74.1 million for the three months ended April 30, 2015, representing period-over-period growth of 201% for its most recent interim period.
Its net loss was $23.4 million, $78.6 million, $183.2 million, $30.0 million and $49.1 million for the fiscal years ended January 31, 2013, 2014 and 2015, and the three months ended April 30, 2014 and 2015, respectively.
For the fiscal year ended January 31, 2015, and the three months ended April 30, 2015, 77% and 79% of revenue was from the United States and 23% and 21% from the rest of the world.

With the quiet period coming to an end, analysts are now weighing in on Pure Storage:

Merrill Lynch initiated coverage with a Buy rating.
Barclays initiated coverage with an Equal Weight rating with a $21 price target.
Evercore initiated coverage with a Buy rating and a $21 price target.
Goldman Sachs initiated coverage with a Neutral rating.
KeyBanc initiated coverage with an Overweight rating and a $24 price target.
Pacific Crest initiated coverage with an Overweight rating and a $24 price target.
Raymond James initiated coverage with an Outperform rating.
Stifel initiated coverage with a Buy rating and a $24 price target.

Shares of Pure Storage were trading up 09% at $17.79 Monday morning, with a consensus analyst price target of $21.33. The stock has a post-IPO trading range of $15.50 to $20.60.

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