Pure Storage (PSTG) Gains 29.5% YTD: Will the Trend Continue?
Pure Storage PSTG witnessed healthy momentum year to date. Shares of the company have gained 29.5% compared with the S&P 500 Composite growth of 15.7% in the same time frame.
The company offers Cloud Data Services, a suite of new cloud offerings that aids customers to invest in a single storage architecture. Also, Pure Storage provides software-defined all-flash solutions that are uniquely fast and cloud-capable for customers.
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Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The company is likely to benefit from the growing demand for its FlashArray and FlashBlade businesses, as well as strong growth prospects in the data-driven market of machine learning bode well. In the fiscal second quarter, the company noted that FlashBlade//S won a generative AI footprint in the production environment, while Portworx witnessed multiple wins in early AI development environments.
The company continues to invest heavily in research and development to launch new products and enhance its existing product line. In June, the company announced the launch of its FlashArray//E to further expand its disk replacement-focused Pure//E family. It will help customers to reduce costs and e-waste. On the same day, the company announced the launch of its FlashArray//X and FlashArray//C R4 models to help customers boost performance for business-critical workloads and reduce costs.
The company continues to benefit from the rising customer base. In the last reported quarter, Pure Storage added more than 276 customers. The company’s customer base includes 58% of Fortune 500 companies.
PSTG outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 44.1%, on average. The company has impressive long-term earnings per share (EPS) growth expectation of 14.8% compared with the industry’s growth rate of 13.4%.
The company also has a steady share repurchase program. In the fiscal second quarter, the company returned $22 million to shareholders by repurchasing 0.6 million shares. The company has $190 million left from its previously announced $250 million share-repurchase plan.
Going ahead, the company expects revenues to be $760 million for third-quarter fiscal 2024, representing a rise of 12% from the year-ago reported figure. The non-GAAP operating income for the fiscal third quarter is expected to be $135 million. The non-GAAP operating margin is expected to be 17.8%.
However, weakness in global macroeconomic conditions and cutbacks in spending by clients are likely to affect the company’s performance. Also, rising costs on product enhancements, acquisitions, and research and development are likely to exert pressure on margin expansion.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Asure Software ASUR, Aspen Technology AZPN and Badger Meter BMI. Asure Software presently sports a Zacks Rank #1 (Strong Buy), whereas Badger Meter and Aspen Technology currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 376.4%. Shares of ASUR have surged 66.7% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 12.6% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 6.3% in the past 60 days to $2.86.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 69.5% in the past year.
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Pure Storage, Inc. (PSTG) : Free Stock Analysis Report
