Bubble Wrap maker Sealed Air surges on report of buyout talks
On Thursday, Citi analysts, led by Asiya Merchant, reaffirmed their Buy rating and $65.00 price target for Pure Storage (NYSE:PSTG), following the company’s reported revenue and operating margin surpassing expectations. With a market capitalization of $18 billion and a robust gross profit margin of nearly 70%, Pure Storage demonstrated strong performance with 12% year-over-year revenue growth, attributing it to sustained demand, particularly for its E-family solutions, which serve as an all-flash hard disk drive alternative. According to InvestingPro analysis, the company currently appears overvalued relative to its Fair Value.
The company’s Storage-as-a-Service (STaaS) offering also saw significant traction, with first-quarter Total (EPA:TTEF) Contract Value (TCV) sales soaring by 70% year-over-year, a notable increase from the 20% growth observed in the previous quarter. Subscription Annual Recurring Revenue (ARR) and Remaining Performance Obligations (RPO) both expanded by 18% year-over-year. InvestingPro data reveals the company maintains a strong financial health score of GOOD, with more cash than debt on its balance sheet - one of 12 key insights available to Pro subscribers.
Citi’s analysis pointed out Pure Storage’s active engagement in artificial intelligence through the introduction of its FlashBlade//E product, designed for AI workloads. This development was complemented by recent partnerships with QLC flash providers and steady progress in capturing hyperscaler opportunities. Despite the broader macroeconomic uncertainties, Pure Storage has reiterated its fiscal year 2026 guidance, which includes a cautious outlook for the second half but incorporates the strength seen in the first half of the year.
For fiscal year 2026, product margins are expected to be in the mid-60s percentile range, reflecting continued demand for the E-family products and anticipated moderation in QLC flash pricing. Subscription margins are projected to remain stable at around 77%. Citi’s endorsement of Pure Storage is based on the company’s potential for continued growth in the flash storage and subscription services sectors, as well as the opportunity to expand its Total Addressable Market (TAM) through wins in the hyperscaler space. The Buy rating and target price are predicated on an unchanged 29x Price to Earnings (PE) ratio for the next twelve months. For deeper insights into Pure Storage’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which provides detailed analysis of the company’s current P/E ratio of 167.48 and other key financial indicators.
In other recent news, Pure Storage reported its first-quarter fiscal year 2026 earnings, revealing a significant miss on earnings per share (EPS) expectations. The company reported an EPS of -$0.04, falling short of the forecasted $0.25, although revenue exceeded forecasts, coming in at $779 million against the expectation of $770.1 million. Despite the EPS miss, Pure Storage demonstrated strong revenue growth, driven by a 17% rise in subscription services revenue and an 18% increase in annual recurring revenue. BofA Securities raised its price target for Pure Storage to $76, acknowledging the company’s financial performance that surpassed revenue and EPS expectations but maintained a Neutral rating due to ongoing challenges in operating margins. Evercore ISI maintained an Outperform rating and a $70 price target, highlighting Pure Storage’s 12% year-over-year revenue growth and significant contributions from the Subscription Services segment. JPMorgan, however, reduced its price target to $70 from $75, maintaining a Neutral rating, citing macroeconomic uncertainties impacting the company’s full-year outlook. Additionally, CFO Kevan Krysler is set to depart, marking a notable corporate development amidst these financial updates.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.