Evercore ISI maintains Pure Storage stock at Outperform, $75 target

On Monday, Evercore ISI reiterated an Outperform rating on Pure Storage (NYSE:PSTG) with a stable price target of $75.00. The company, currently trading at $65.07 with a market capitalization of $21.3 billion, has demonstrated impressive momentum with a 60.39% return over the past year. According to InvestingPro analysis, Pure Storage maintains strong financial health with multiple positive indicators, though it currently trades above its calculated Fair Value. The firm’s optimism is fueled by the belief that Pure Storage is in a strong position to meet or surpass the Wall Street consensus for its January-quarter sales and EPS, which are expected to be $869 million and $0.42, respectively. With the company’s next earnings report due on February 26, InvestingPro data reveals impressive fundamentals, including a robust gross profit margin of 71.07% and steady revenue growth of 7.97% over the last twelve months. For investors seeking deeper insights, InvestingPro offers 14 additional key tips about Pure Storage’s performance and potential. Evercore ISI anticipates that the company’s April-quarter and initial FY26 revenue guidance could exceed current market estimates.

According to Evercore ISI, several factors support their positive outlook, including sustained demand for enterprise storage, particularly all-flash arrays, and a decrease in NAND pricing that could positively affect margins. They also note a trend in purchasing behavior shifting from operational expenditure (opex) to capital expenditure (capex), along with an improvement in the enterprise IT spending climate.

Despite the consensus predicting modest growth for the January quarter at 4.5% quarter-over-quarter compared to a historical average of 17.3%, Evercore ISI suggests that if Pure Storage continues to see a rise in capex sales, the actual product sales growth could outperform the street estimates of approximately 5.5% quarter-over-quarter growth.

Furthermore, the firm points out that while some of Pure Storage’s peers experienced significant strength in all-flash sales in CY24, Pure Storage is set to benefit from more favorable year-over-year comparisons as it progresses through FY26. This situation is expected to create an upside bias as enterprise IT budgets are released, customers upgrade outdated infrastructure, and Pure Storage captures more market share. The company’s solid financial position is evidenced by its healthy balance sheet, with InvestingPro analysis showing it holds more cash than debt and maintains strong liquidity ratios. Discover comprehensive insights about Pure Storage and 1,400+ other top stocks through InvestingPro’s detailed Research Reports.

Investor attention is also likely to be drawn to updates regarding Pure Storage’s progress with a major hyperscale design win and the potential for additional design wins. Evercore ISI concludes that multiple catalysts are in place that could unlock value in Pure Storage shares, including a cyclical recovery in storage, a potential pivot to capex purchases, and the ongoing development of the company’s hyperscale cloud opportunity.

In other recent news, Pure Storage has been making headlines with its recent financial achievements and strategic wins. The company reported a strong third fiscal quarter, with revenue and operating income surpassing guidance, leading to increased optimism among analysts. Following these results, TD Cowen raised its price target for Pure Storage to $80, maintaining a Buy rating, while BofA Securities increased its target to $77 but kept a Neutral rating. Lake Street Capital Markets also raised its price target to $70, reiterating a Buy rating, highlighting the company’s significant design win with a top-four hyperscaler.

This hyperscaler deal is anticipated to substantially impact Pure Storage’s revenue and operating income in the coming years, with projections of double-digit exabyte shipments. Piper Sandler also noted Pure Storage as a key player poised to benefit from Project Stargate, a major government initiative focusing on AI-datacenter construction. Analysts suggest that this involvement could significantly enhance Pure Storage’s gross margins and market opportunities.

Additionally, Pure Storage updated its fiscal 2025 revenue guidance, now aiming for $3.5 billion, marking an 11.5% growth year-over-year. The company is transitioning some of its Evergreen One offerings to traditional capital expenditure sales, which has influenced its revenue projections. These developments reflect a growing confidence among analysts in Pure Storage’s ability to capitalize on its recent successes and expand its market presence.

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