BMO Capital Reiterates Outperform on Pure Storage, Inc. (PSTG) Following A Strong 4Q
BMO Capital reiterated an Outperform rating and $25.00 price target on Pure Storage (NYSE: PSTG) following the company's 4Q results. Revenue of $150 million topped consensus estimate of $139 million, as gross margins beat expectations by more than 200 bps. EPS of ($0.12) was above consensus ($0.16)estimate.
Analyst Tim Long commented, "Pure reported a strong quarter, beating expectations on all metrics. Revenue of$150 million topped our/consensus estimate of $139 million, gross margins beatby more than 200 bps, operating margins were nearly 700 bps better, FCF was positive for the first time, and EPS of ($0.12) was above our/consensus ($0.16)estimate. The revenue strength was broad-based across verticals and Pure continues to see strong follow-on business from existing customers. Even as the storage market has become intensely competitive, Pure posted surprisinglystrong gross margins as the move to the new //m series platform provides amuch better margin profile. Revenue and gross margin guidance were alsostrong, though following a seasonal decline in F1Q, the full-year revenue guidance implies very strong sequential growth for the remainder of the yearand operating expenses will remain elevated albeit with improving operatingleverage in the second half of the year. Given the better revenue outlook, we areraising our FY17 revenue and EPS estimates to $720M/($0.72) from $676M/($0.76) and our FY18 estimates to $1,053M/($0.39) from $980M/($0.47)."
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Shares of Pure Storage closed at $15.71 yesterday.