Pure Storage Stock Is Continuing Its Fall This Month


Dec. 11 2018, Updated 8:03 a.m. ET

PSTG’s returns

Shares of storage company Pure Storage (PSTG) fell 5.9% to close trading at $17.41 on December 7. Pure Storage has generated returns of -8% this month and -33% since the start of October.

Despite the recent pullback, PSTG is up 10% in 2018. The stock prices of its peers Western Digital (WDC), Seagate (STX), and NetApp (NTAP) fell 3.6%, 4.2%, and 6%, respectively, on December 7.

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Robust revenue and earnings growth

PSTG is expected to grow its revenue by 35% to $1.38 billion in fiscal 2019 (which ends in January), by 27.6% to $1.76 billion in fiscal 2020, and by 21% to $2.13 billion in fiscal 2021. Its non-GAAP (generally accepted accounting principles) EPS are expected to rise from -$0.19 in fiscal 2018 to $0.25 in fiscal 2019 and $0.41 in fiscal 2020. Its earnings could grow at a CAGR (compound annual growth rate) of 20% over the next five years.

PSTG is still unprofitable at a GAAP level. Analysts expect the company’s net margin to improve from -17.4% in fiscal 2018 to -12% in fiscal 2019 and -7% in fiscal 2020.

Of the 20 analysts covering Pure Storage, 14 have “buy” recommendations, six have “hold” recommendations, and none have “sell” recommendations on its stock. The average 12-month price target for Pure Storage is $26.33, which indicates a potential upside of 51%.


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