Pure Storage Dips 5% As 3Q Sales Fall; Analyst Lifts PT

Shares of Pure Storage dropped 5% in Wednesday’s pre-market trading as the flash-based storage provider reported that its 3Q profit plunged and sales declined.

Revenues fell 4% year-over-year to $410.6 million but was slightly above the Street’s estimates of $407 million. The company’s earnings of $0.01 slumped over 92% from the year-ago quarter. However, it surpassed the analysts’ projection of a break-even.

Pure Storage’s (PSTG) products sales declined 15.1% year-over-year to $274.5 million, while subscription services revenue jumped 29.5% to $136.1 million. The company’s CFO Kevan Krysler said “We were pleased with the strong sales growth and demand for our Subscription Services, Flashblade and FlashArray//C offerings during the quarter.”

As for 4Q, Pure Storage expects revenue to generate $480 million, a decline of about 2% from the year-ago quarter. The company projects full-year revenues to amount to $1.66 billion, which represents about 1% growth. Krysler said that “Visibility of business conditions has improved, but uncertainty of the near-term impacts the global resurgence of COVID may have on our business continues to exist.” (See PSTG stock analysis on TipRanks).

Following the results, Oppenheimer analyst George Iwanyc raised the stock’s price target to $21 (6.3% upside potential) from $20 and maintained a Buy rating. In a note to investors, Iwanyc said “Pure’s results and outlook were modestly better than we expected, reinforcing our comfort in management’s strategic vision focused on product/TAM expansion and pivoting to more subscription/cloud services.” The analyst added “our long-term view is unchanged, seeing positives in product expansion and Pure’s growing subscription/recurring revenue mix.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 7 Buys and 4 Holds. The average price target stands at $20.30 and implies upside potential of about 2.7% to current levels. Shares have risen by 15.5% year-to-date.

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