On Wednesday, Raymond (NS:RYMD) James expressed confidence in Pure Storage (NYSE:NYSE:PSTG) stock, as the firm adjusted its price target upward to $78 from the previous $70, while reaffirming the Outperform rating.
The revision follows Pure Storage's impressive third-quarter fiscal year 2025 performance, which exceeded expectations and included a significant announcement of a partnership with a leading hyperscale operator.
The company, currently valued at $17.54 billion, has demonstrated strong momentum with a year-to-date return of over 50%. According to InvestingPro data, Pure Storage maintains a robust financial position with a current ratio of 1.99, indicating strong liquidity.
The analyst from Raymond James highlighted the recent beat and raise in Pure Storage's fiscal third-quarter report, which was somewhat eclipsed by the confirmation of a strategic agreement with one of the top four hyperscale operators.
Despite previous hints from management about this potential development, the stock's substantial 20% increase in after-hours trading suggests that investors had retained a degree of skepticism or uncertainty.
InvestingPro analysis reveals the company is expected to grow revenues by 11% this fiscal year, with 12 additional exclusive insights available to subscribers through detailed Pro Research Reports.
This landmark deal is structured as a unique licensing agreement, which the analyst had previously anticipated as the likely result of this collaboration. Notably, the contract does not encompass hardware sales, rendering its financial impact challenging to estimate. Additionally, it is not projected to contribute to Pure Storage's revenue until fiscal year 2027.
In the meantime, Raymond James anticipates that enterprise spending will improve, particularly in areas related to artificial intelligence adoption and hard disk drive (HDD) replacements. These investments, along with other cloud opportunities, are expected to support Pure Storage's growth trajectory.
The analyst's statement concluded with a reaffirmation of the new $78 price target, reflecting a positive outlook for Pure Storage's future prospects, driven by both the recent financial results and the strategic hyperscale partnership.
Based on InvestingPro's Fair Value analysis, the stock appears to be trading above its intrinsic value, with current trading multiples showing a P/E ratio of 125 and an EV/EBITDA of 57.5. Discover comprehensive valuation metrics and expert insights for over 1,400 US stocks with InvestingPro's advanced research tools.
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