Morgan Stanley assumes coverage on Pure Storage stock with Equalweight rating

Investing.com - Morgan Stanley (NYSE:MS) has assumed coverage on Pure Storage (NYSE:PSTG) with an Equalweight rating and a price target of $60.00. According to InvestingPro data, the stock currently trades at $55.53, with analyst targets ranging from $50 to $93.

The investment bank cited Pure Storage’s differentiating attributes in performance, total cost of ownership, and simplicity as creating a competitive moat against enterprise storage peers, enabling consistent market share gains expected to continue. The company’s strong financial position is evident in its "GOOD" overall health score from InvestingPro, with revenue growing at 10.85% and maintaining a healthy gross profit margin of 69.25%.

Morgan Stanley noted that Pure Storage’s work with Meta (NASDAQ:META) and Crowdstrike demonstrates its potential role in hyperscale and AI data centers, though these exposures remain minimal currently, and next year’s potential Meta order for over 10 exabytes has not yet been placed.

The firm expressed concern about software-centric storage competitors like VAST, WEKA.io, DDN, and Hammerspace that could potentially disrupt Pure Storage’s competitive positioning in cloud data centers.

Morgan Stanley also highlighted a potential positive angle with Pure Storage’s new CFO, who has historically overseen cost rationalization efforts, possibly leading to margin expansion that has stalled in recent years.

In other recent news, Pure Storage reported a 12% year-over-year revenue growth, surpassing expectations, driven by strong demand for its E-family solutions. The company’s Storage-as-a-Service (STaaS) offering experienced a notable 70% increase in Total (EPA:TTEF) Contract Value sales in the first quarter, reflecting robust market traction. Subscription Annual Recurring Revenue and Remaining Performance Obligations also grew by 18% year-over-year. In addition, Pure Storage appointed Tarek Robbiati as its new Chief Financial Officer, bringing over 25 years of experience in financial leadership within the technology sector. The company introduced its Enterprise Data Cloud platform, aimed at simplifying data management across various environments. Pure Storage also expanded its next-generation storage products, including the FlashArray//XL R5, which enhances performance and capacity. Piper Sandler raised the price target for Pure Storage to $66, maintaining an Overweight rating due to a positive business outlook. Citi analysts reaffirmed a Buy rating with a $65 target, highlighting the company’s impressive financial performance and growth potential.

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