Gold prices hold sharp gains as soft US jobs data fuels Fed rate cut bets
On Thursday, UBS analyst David Vogt adjusted the price target for Pure Storage (NYSE:PSTG) shares, raising it to $50.00 from the previous $47.00. Despite this increase, the Sell rating on the company’s stock was maintained. Currently trading at $56.16, the stock has experienced a significant 7.91% decline over the past week, according to InvestingPro data. Vogt’s assessment followed Pure Storage’s mixed financial results for the fourth quarter and provided guidance for fiscal year 2026, which indicated continued subdued demand for the upcoming quarters.
Vogt pointed out that unlike the previous quarter, where a significant hyperscaler licensing agreement for Pure’s DFM module technology helped to counterbalance weak storage demand and unimpressive Total (EPA:TTEF) Contract Value (TCV) metrics, the current report did not offer similar mitigating factors. While InvestingPro data shows the company maintains strong fundamentals with a 71.07% gross profit margin and 7.97% revenue growth over the last twelve months, the analyst expressed concern that the forecast for at least another four quarters of muted demand would not be sufficient to bolster the stock as a transition to fiscal year 2027/calendar year 2026.
The company’s gross margins on products are expected to be affected by rising NAND prices, which decreased by approximately 440 basis points quarter over quarter in the fourth quarter. Pure Storage has projected that product gross margins will remain in the mid-60 percent range throughout the first half of fiscal year 2026. Vogt suggested that this pressure on margins could lead to a contraction in Pure Storage’s valuation multiples, which are already elevated with a P/E ratio of 136.68. For deeper insights into Pure Storage’s valuation metrics and financial health score of 2.77 (rated as GOOD), consider exploring the comprehensive analysis available on InvestingPro.
Additionally, despite Pure Storage’s progress on co-development with a hyperscaler, the company’s guidance for fiscal year 2026 includes only one to two exabytes, indicating limited potential for financial growth and share price appreciation within the year. This conservative estimate, according to Vogt, suggests that investors should not expect significant upside from these developments in the near term. Based on InvestingPro’s Fair Value analysis, the stock currently appears overvalued, adding another layer of caution to the investment thesis.
In other recent news, Pure Storage reported its fourth-quarter fiscal year 2025 financial results, surpassing analysts’ expectations with an earnings per share (EPS) of $0.45 compared to the forecasted $0.41. The company also exceeded revenue forecasts, achieving $879.8 million against a projected $868.53 million. Despite this strong performance, Pure Storage’s stock experienced a decline in aftermarket trading. Looking forward, the company projects an 11% revenue growth for fiscal year 2026, aiming for just over $3.5 billion. In terms of analyst actions, Piper Sandler maintained an Overweight rating on Pure Storage with a $76 price target, while Citi adjusted its price target to $77, down from $80, but kept a Buy rating. Both firms highlighted the company’s potential growth opportunities with major cloud providers and its data management platform, Portworx. Challenges were noted in product gross margins, attributed to the E-class family’s adoption and NAND pricing dynamics. Nonetheless, Pure Storage remains optimistic about future margin improvements as NAND pricing stabilizes.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.