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Reasons to Retain Pure Storage (PSTG) Stock in Your Portfolio

Pure Storage PSTG is benefiting from continued momentum in its subscription services, namely Pure as-a-Service subscription (includes Cloud Block Store), Portworx and Evergreen Storage.

The company also has an impressive Growth Score of A. This style score consolidates all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

Pure Storage’s fiscal 2023 and fiscal 2024 earnings are expected to increase 31.9% and 16.1%, respectively, year over year. Revenues are anticipated to rise 22.4% and 15.4% in fiscal 2023 and fiscal 2024, respectively.

Pure Storage has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 205.4%, on average.

Pure Storage reported non-GAAP earnings of 25 cents per share in the last reported quarter, beating the Zacks Consensus Estimate of 4 cents. In the prior-year quarter, the company reported break-even earnings. Total revenues increased 50% from the year-ago quarter to $620.4 million. Moreover, the top line surpassed the Zacks Consensus Estimate by 18.7%.

 

Pure Storage stock has gained 34.7% in the past year against a 19.6% decline of the industry it belongs to and a 9.6% fall of the Zacks S&P 500 composite.

PSTG stock is down 26.6% from its 52-week high level of $36.71 on Mar 28, 2022, making it relatively affordable for investors.

Strong Fundamentals

The accelerated migration to private and hybrid cloud infrastructure and increasing usage of flash solutions in data centers are driving demand for Pure Storage’s solutions. As mentioned above, strength in its subscription services’ portfolio continues to be a major growth driver.

Incremental gains from the healthy uptake of FlashArray and FlashBlade — particularly the second-generation FlashArray//C (an all-QLC flash array) solutions — is other tailwind. FlashArray//C is a cost-effective storage array solution that offers enhanced performance capabilities and helps clients run complex cloud workloads on a single platform.

Recently, Pure Storage unveiled the FlashBlade//S solution powered by the company’s all-QLC modular architecture. The new platform can deliver high levels of performance and capacity optimization without caching solutions. The new FlashBlade//S takes advantage of nearly unlimited metadata architecture to offer great performance and power efficiency than previous versions, added the company.

Pure Storage introduced Evergreen//Flex to expand the Pure’s Evergreen technology. Evergreen//Flex is a new fleet of Evergreen architecture that provides customers with storage efficiency through asset utilization mode.

A higher customer base (especially large enterprise clients) along with strength in commercial business bodes well. In the last reported quarter, Pure Storage Pure Storage added 360 customers in the reported quarter. The company’s customer base includes 54% of the Fortune 500 companies.

Driven by strong performance, Pure Storage expects revenues of $635 million for second-quarter fiscal 2023, indicating growth of 28% from the year-ago reported figure.

For fiscal 2023, Pure Storage expects revenues of $2.66 billion, indicating year-over-year growth of 22%.

However, higher expenses on product development amid stiff competition from other storage peers are significant headwinds. Pandemic-induced widespread supply chain disruptions, component shortages and related increasing costs are added concerns for this Zacks Rank #3 (Hold) stock.

Stocks to Consider

Some top-ranked stocks from the broader technology sector worth consideration are InterDigital IDCC, PTC PTC and Vishay Intertechnology VSH. While PTC and InterDigital sport a Zacks Rank #1, Vishay Intertechnology carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Vishay Intertechnology’s 2022 earnings is pegged at $2.68 per share, rising 10.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.7%.

Vishay Intertechnology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 5%. Shares of VSH have declined 18.2% in the past year.

The Zacks Consensus Estimate for InterDigital 2022 earnings is pegged at $3.33 per share, up 46.1% in the past 60 days. IDCC’s long-term earnings growth rate is pegged at 15%.

InterDigital’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 141.1%. Shares of IDCC have lost 12.2% of their value in the past year.

The Zacks Consensus Estimate for PTC’s fiscal 2022 earnings is pegged at $4.55 per share, rising 2.9% in the past 60 days. The long-term earnings growth rate is anticipated to be 11.8%.

PTC’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 29.4%. Shares of PTC have grown 20.8% in the past year.


5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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InterDigital, Inc. (IDCC): Free Stock Analysis Report
 
Vishay Intertechnology, Inc. (VSH): Free Stock Analysis Report
 
PTC Inc. (PTC): Free Stock Analysis Report
 
Pure Storage, Inc. (PSTG): Free Stock Analysis Report
 
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