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Pure Storage Stock Fell after Quarterly Results

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May. 23 2019, Published 7:03 a.m. ET

Pure Storage stock fell 25%

The stock of hardware storage company Pure Storage (PSTG) fell almost 25% on May 22. The company announced its first-quarter results of fiscal 2020 (year ending in January) on May 21 and reported sales of $326.7 million, a rise of 28% YoY. Pure Storage reported adjusted EPS of -$0.11 in the first quarter.

Wall Street estimated Pure Storage to post sales of $333.16 million and EPS of -$0.07 in the first quarter. While Pure Storage’s sales were marginally below estimates, the wider than estimated EPS loss drove the stock lower significantly yesterday.

Pure Storage also estimates sales of $395 million in the second quarter and sales of $1.73 billion in fiscal 2020. These estimates were below analyst estimates of $397 million for the second quarter and $1.77 billion in fiscal 2020.

Pure Storage recorded its largest-ever decline in stock price yesterday since it began trading back in October 2015. Pure Storage stated that a longer sales cycle impacted the top line and may continue to do so in the near term.

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Analysts revise price targets

Following Pure Storage’s lackluster performance, several Wall Street analysts have revised their 12-month price target for the firm. Piper Jaffray lowered Pure Storage’s price target to $20 from $25 while Stifel lowered its price target to $20 from $22. KeyBanc also lowered Pure Storage’s price target from $30 to $25.

Pure Storage stock has now declined 32% in May 2019. The recent sell-off has wiped out prior gains as the stock has now fallen 3.6% since the start of 2019. Despite Pure Storage’s robust revenue growth, the stock has not generated significant returns over the years.

On October 5, 2015, Pure Storage stock closed trading at $16.18, which is 4.2% above its current price.

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