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Investing.com - UBS raised its price target on Pure Storage (NYSE:PSTG) to $60.00 from $55.00 while maintaining a Sell rating on the stock. This cautious stance aligns with InvestingPro data showing PSTG trading at a P/E ratio of 171.1 and currently priced at $70.02, suggesting the stock may be overvalued despite its strong performance.
Pure Storage reported revenue of $964.5 million and operating income of $196.2 million, exceeding UBS expectations. The company achieved its fiscal year 2026 exabyte target a quarter early, driven by Meta performance. InvestingPro data shows the company has maintained solid revenue growth of 13.18% over the last twelve months, with a strong balance sheet that holds more cash than debt.
Despite the beat, UBS noted the market likely expected stronger results given all-flash strength at competitors NetApp and Dell. Pure Storage raised its FY26 revenue guidance by only about 50 basis points, projecting fourth-quarter revenue of $1.02 to $1.04 billion, which aligns with market expectations.
UBS expressed concern that Pure Storage indicated it is considering alternative hyperscaler financial models, suggesting potential pressure on gross margins next year. The company also stated it expects "significant incremental investments in R&D and S&M" in fiscal year 2027.
The investment bank views the FY27 consensus margin outlook of approximately 40% incremental operating margins as too aggressive, likely leading to negative consensus EPS revisions for fiscal year 2027.
In other recent news, Pure Storage reported its third-quarter earnings for fiscal year 2026, meeting analyst expectations for earnings per share (EPS) and slightly surpassing revenue forecasts. The company posted an EPS of $0.58, aligning with projections, while revenue reached $964.5 million, exceeding the anticipated $955.03 million. Following this announcement, several analysts adjusted their outlooks on the company. TD Cowen raised its price target for Pure Storage to $100, maintaining a Buy rating, while JPMorgan lowered its target slightly to $105, keeping an Overweight rating. Conversely, Susquehanna downgraded the stock from Positive to Neutral, citing concerns over the company’s ability to scale its hyperscaler revenues. Raymond James also adjusted its price target from $99 to $97 but maintained an Outperform rating. These developments reflect varied analyst perspectives on Pure Storage’s future performance.
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