Pure Storage has a robust, long-term progress outlook, based on Guggenheim Securities. The funding agency initiated protection of the software program storage agency with a purchase score Thursday. Guggenheim’s worth goal of $48 implies potential upside of about 50% from the inventory’s closing worth of $31.81 on Wednesday. The consensus worth goal amongst analysts surveyed by FactSet is $42. Shares of Pure Storage have rallied greater than 19% to date this 12 months, matching the S & P 500. PSTG YTD mountain PSTG ytd chart Analysts led by Howard Ma praised Pure Storage for its innovation, calling it a “disruptor in the enterprise storage market.” “Its ground up approach to designing all-flash storage systems with proprietary software that natively controls NAND flash has yielded what most IT buyers consider nirvana — better performance at lower cost,” Ma wrote in an 87-page report. He added that Pure Storage’s technique has allowed it to double its income share within the major storage market to 10% in simply 5 years. Ma believes the corporate may finally obtain 20% and even 50% market share, which he stated would correspond to “$10 billion or 3.5x incremental revenue.” The analyst sees additional alternatives for Pure Storage within the secondary storage market, the place he estimated that round 40% of the market — a $3 billion alternative — is now out there for seize. Nevertheless, this may be depending on the corporate considerably reducing its common promoting worth. “Given our analysis of NAND flash prices, we struggle to see how Pure can lower its ASP to $0.05/GB, which would give it a shot at selling directly to AWS, Azure or Google. It’s possible though, considering this team continues to push the boundaries,” Ma wrote. Guggenheim famous, nevertheless, that Pure Storage’s finish success doesn’t depend on these “incremental opportunities.” That is as a result of he believes the corporate may sooner or later be valued like a software program firm given its excessive stream of steady income, which might considerably enhance its inventory worth. Shares of Pure Storage are presently comparatively undervalued versus software program friends, reflecting solely “modest incremental traction” throughout the major storage market. — CNBC’s Michael Bloom contributed to this report.
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