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Investing.com - BofA Securities raised its price target on Pure Storage (NYSE:PSTG) stock to $80.00 from $76.00 on Thursday, while maintaining a Neutral rating following the company’s recent earnings report. The stock, currently trading at $60.86, has shown impressive momentum with a 9.2% gain in the past week, though InvestingPro analysis indicates the stock may be trading above its Fair Value.
The data storage company reported better-than-expected revenue and earnings per share results, with improved operating margins across its business segments. The company maintains strong fundamentals with a healthy 69.3% gross profit margin and generates substantial free cash flow of $566 million over the last twelve months.
BofA Securities noted that Pure Storage’s strong performance stemmed from broad-based demand for its products rather than being driven by hyperscaler customers, where the outlook remains largely unchanged.
The firm attributed the improvement in product gross margins to three factors: revenue mix between product and software, product mix as customers opt for higher-end solutions, and pricing discipline.
Despite the positive results, BofA maintained its Neutral stance, citing concerns about product growth acceleration, pending hyperscaler deals that have yet to boost estimates, and potential margin risks from ongoing investments and competitive market dynamics.
In other recent news, Pure Storage reported quarterly earnings that surpassed analyst expectations, with earnings per share reaching $0.43, exceeding the forecasted $0.39. The company also reported revenue of $861 million, which was higher than the projected $846 million. This performance reflects a 12.7% overall sales growth, with notable increases in both product and services/software segments. Following these results, Evercore ISI raised its price target for Pure Storage to $80, maintaining an Outperform rating. Similarly, Piper Sandler increased its price target to $78, keeping an Overweight rating on the stock. The company also reported accelerating remaining performance obligations and improved gross profit margins, with product gross profit margin up by 4% quarter-over-quarter. These developments have contributed to a positive outlook from analysts and investors.
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