Pure Storage's Q4 and FY 2024 Results: Better-Than-Feared, Hold Rating Remains

Stifel Nicolaus's Matthew Sheerin raised their price target on Pure Storage (NYSE: PSTG) by 12.2% from $41 to $46 on 2024/02/29. The analyst maintained their Hold rating on the stock.

In their analysis of Pure Storage's Q4 and FY 2024 print released on February 28, Sheerin described the quarter's results and management's guidance as "better-than-feared." The company's earnings per share (EPS) and revenue slightly outperformed Stifel Nicolaus's estimates. However, despite recognizing Pure Storage's unique technology, changing platform approach, and goals to replace hard disk drives (HDD), Sheerin decided to keep their Hold rating on the stock "because competing hardware OEMs are justly valued."

Pure Storage's Q4 2024 earnings report revealed several key figures. The company reported EPS of $0.50, which beat the Zacks Consensus Estimate of $0.45 but fell short of Q4 2023's $0.53 by 5.7%. Revenue for the quarter was $789.81 million, surpassing the Zacks Consensus Estimate by 0.97% but declining by 3% compared to Q4 2023's $810.21 million. The company's operating income stood at $157.8 million, with an operating margin of 20%.

For FY 2024, Pure Storage reported revenue of $2.8 billion, representing a 3% year-over-year increase. The company's operating income for the fiscal year amounted to $458.4 million, with an operating margin of 16.2%.

Looking ahead, Pure Storage's management provided guidance for Q1 2025 and FY 2025. The company expects Q1 2025 revenue of $680 million, reflecting a growth rate of 15.4%. The projected operating income is $68 million, with an operating margin of 10%. For the full fiscal year 2025, Pure Storage anticipates revenue of $3.1 billion, indicating a growth rate of 10.5%. The projected operating income is $532 million, with an operating margin of 17%.

Chairman and CEO Charles Giancarlo highlighted Pure Storage's data platform strategy, stating that it is revolutionizing the storage industry. He emphasized how the company's platform helps unify fragmented data environments into a seamless, modern, and efficient system that is ready for artificial intelligence applications. Giancarlo also noted that this can be achieved with the reliability, performance, and economics of flash storage, even at the price levels of traditional hard disk systems.

CFO Kevan Krysler expressed satisfaction with the company's performance in FY 2024, as they closed the year delivering strong revenue performance and exceeding their operating margin guidance in Q4. Looking ahead to FY 2025, Krysler expects double-digit revenue growth and strong growth of remaining performance obligations (RPO). He attributed this outlook to Pure Storage's highly differentiated data storage platform and the strength of their Evergreen and Portworx consumption and subscription offerings.

In addition to Stifel Nicolaus's analyst rating update, other analysts also provided their insights on Pure Storage on February 29, 2024. Bank of America's Wamsi Mohan raised their price target by 19%, from $42 to $50, while maintaining a Hold rating on the stock. UBS's David Vogt raised their price target by 15.8%, from $38 to $44, also maintaining a Hold rating. KeyBanc's Thomas Blakey increased their price target by 7.8%, from $51 to $55, and maintained a Strong Buy rating on the stock.

According to current ratings, 70% of top-rated analysts consider Pure Storage a Strong Buy or Buy, while 30% rate it as a Hold. No analysts recommend or strongly recommend selling the stock.

Pure Storage's stock price has experienced significant growth since the company's latest quarterly report on February 28, 2024. It has surged by 32.3% in a short period. In a year-over-year comparison, the stock is up by an impressive 127.8%. During the same period, Pure Storage has outperformed the S&P 500, which has seen a growth rate of 26.7%.

Matthew Sheerin, the Stifel Nicolaus analyst who provided the updated rating, is ranked by WallStreetZen in the top 11% out of 4,485 Wall Street analysts. Sheerin has an average return of 16.3% and a win rate of 79.1%. They specialize in the Technology and Healthcare sectors.

Pure Storage, Inc., based in Mountain View, California, offers a range of storage products including capacity storage, NVME storage, entry-level storage, and file and object storage products such as FlashArray and FlashBlade. The company's products 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. Pure Storage was founded in 2009 and has since become a prominent player in the data storage management and software industry.

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