On Wednesday, BofA Securities adjusted its outlook on Pure Storage (NYSE: NYSE:PSTG), increasing the stock's price target from $68.00 to $77.00. The firm maintained a Neutral rating on the shares. The adjustment comes after Pure Storage reported a strong third fiscal quarter, with revenue and operating income surpassing guidance.
The company, currently valued at $17.54 billion, has demonstrated robust performance with a 50.14% year-to-date return. According to InvestingPro's analysis, Pure Storage maintains a "GREAT" financial health score, supported by strong fundamentals and growth metrics.
The company has been engaged in negotiations over the past year to secure a deal with one of the top four hyperscalers. Today, Pure Storage's management revealed a significant design win that will integrate Pure into the hyperscaler's storage plans for their upcoming generation design. This achievement is expected to substantially impact Pure Storage's revenue and operating income in the calendar year 2026 and fiscal year 2027.
BofA Securities forecasts this could potentially add approximately $0.50 to the company's earnings per share in fiscal 2027. The company's impressive gross profit margin of 71.66% and current revenue growth of 8.89% suggest strong operational efficiency. Discover more detailed insights and 12 additional key tips with an InvestingPro subscription.
Furthermore, Pure Storage has updated its fiscal 2025 revenue guidance, now aiming for $3.5 billion, which marks an 11.5% year-over-year growth. This increase is attributed to a rise in product revenue as some opportunities under $5 billion for the company's Evergreen One offerings have transitioned to traditional capital expenditure sales. However, this shift has also led to a decrease in the total contract value sales of Evergreen One.
In other recent news, Pure Storage has seen significant developments following its impressive third-quarter fiscal year 2024 results. The company announced a major design win with one of the top four hyperscalers, a development that has led to increased optimism from various investment firms.
Lake Street Capital Markets raised the price target for Pure Storage to $70, while Needham, JPMorgan (NYSE:JPM), and Guggenheim also increased their targets to $75, $75, and $93 respectively, maintaining their positive ratings. The hyperscaler design win is expected to contribute substantially to Pure Storage's revenue in fiscal year 2027, with the company maintaining a robust gross profit margin of 71.7%.
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