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Pure Storage, Inc. (NYSE:PSTG) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Sales hit US$411m in line with forecasts, although the company reported a statutory loss per share of US$0.28 that was somewhat smaller than the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Pure Storage from 21 analysts is for revenues of US$1.91b in 2022 which, if met, would be a solid 13% increase on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$0.88 per share. Before this earnings announcement, the analysts had been modelling revenues of US$1.92b and losses of US$0.88 per share in 2022.
The average price target fell 6.5% to US$21.14, with the ongoing losses seemingly a concern for the analysts, despite the lack of real change to the earnings forecasts. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Pure Storage at US$26.00 per share, while the most bearish prices it at US$15.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Pure Storage's past performance and to peers in the same industry. We would highlight that Pure Storage's revenue growth is expected to slow, with forecast 13% increase next year well below the historical 28%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.4% next year. So it's pretty clear that, while Pure Storage's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Pure Storage. Long-term earnings power is much more important than next year's profits. We have forecasts for Pure Storage going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Pure Storage that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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