Pure Storage Receives Buy Rating and $66 Price Target from Needham Analyst

Needham's Mike Cikos initiated their coverage on Pure Storage (NYSE: PSTG) with a Buy rating and a $66 price target. Cikos praised Pure Storage's "differentiated" direct-to-flash storage product, which has consistently outperformed its peers in terms of market share. The analyst emphasized the importance of Pure Storage's Purity OS, a unified software layer that provides a uniform user experience across all products.

In its latest earnings report, Pure Storage reported earnings per share (EPS) of $0.50 for Q4 2024, beating the Zacks Consensus Estimate of $0.45. However, it fell short of Q4 2023's EPS of $0.53 by 5.7%. The company's revenue for Q4 2024 came in at $789.81 million, surpassing the Zacks Consensus Estimate by 0.97%, but fell 3% short of Q4 2023's revenue of $810.21 million. Pure Storage reported an operating income of $157.8 million and an operating margin of 20% for Q4 2024.

For the full year 2024, Pure Storage reported revenue of $2.8 billion, representing a 3% increase year-over-year. The company generated an operating income of $458.4 million and achieved an operating margin of 16.2%. Looking ahead, Pure Storage's management provided guidance for Q1 2025, including an expected revenue of $680 million, revenue growth of 15.4%, operating income of $68 million, and an operating margin of 10%. For the full year 2025, the company anticipates revenue of $3.1 billion, revenue growth of 10.5%, operating income of $532 million, and an operating margin of 17%.

Chairman and CEO Charles Giancarlo expressed confidence in Pure Storage's data platform strategy, stating, "Our data platform strategy is revolutionizing the storage industry. It helps enterprises and service providers unify fragmented data environments into a seamless, modern, and efficient system - a system performance-ready for artificial intelligence." Giancarlo emphasized the company's ability to deliver flash reliability, performance, and economics at hard disk system price levels.

CFO Kevan Krysler highlighted Pure Storage's strong performance in the recently closed fiscal year, exceeding revenue and operating margin guidance in Q4. Looking ahead to FY25, Krysler expects double-digit revenue growth and strong growth of RPO (Remaining Performance Obligation), fueled by the company's highly differentiated data storage platform and the strength of its Evergreen and Portworx consumption and subscription offerings.

According to WallStreetZen, 72.7% of top-rated analysts currently rate Pure Storage as a Strong Buy or Buy, while 27.3% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

Since Pure Storage's latest quarterly report on February 28, 2024, the stock price has surged by 35.2%. Year-over-year, the stock has seen an impressive increase of 132.7%. During this period, Pure Storage has outpaced the S&P 500, which has risen 26.1%.

Analyst Mike Cikos, who initiated coverage on Pure Storage, is ranked in the top 2% out of 4,489 Wall Street analysts by WallStreetZen. Cikos specializes in the Financial Services and Technology sectors and boasts an average return of 17.1% with a 64% win rate.

Pure Storage, Inc., headquartered in Mountain View, CA, offers a range of storage products including capacity storage, NVME storage, entry-level storage, and file and object storage products like FlashArray and FlashBlade. The company's offerings are utilized by cloud-based software and service providers, as well as in various industries such as consumer web, education, energy, financial services, government, healthcare, manufacturing, media, retail, and telecommunications.

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