Pure Storage Stock (PSTG): Should I Buy It Now?

By Amit Chowdhry ● June 1, 2020
  • Should you buy Pure Storage Inc stock (NYSE: PSTG) now? Here is some information to help you decide.

Pure Storage (NYSE: PSTG) is a company that delivers a modern data experience that empowers organizations to run their operations as an automated storage-as-a-service model across multiple clouds. Plus the company helps customers put data to use while reducing the complexity and expense of managing the infrastructure behind it. It is known as one of the fastest-growing enterprise IT companies in history.

Last week, Pure Storage announced the financial results for its first quarter ended May 3, 2020. For the first quarter, revenue was $367.1 million (up 12% year-over-year), subscription services revenue was $120.2 million (up 37% year-over-year), GAAP gross margin was 70% and non-GAAP gross margin was 71.9%. Plus operating cash flow was $35.1 million (up $28.5 million year-over-year) and free cash flow was $11.3 million (up $29 million year-over-year). The company’s total cash and investments were $1.3 billion.

Pure Storage Chairman and CEO Charles Giancarlo credited the company’s employees for adapting quickly and delivering the technology and services that the company’s customers needed for keeping their organizations up and running.

“Pure delivered solid financial results during the quarter despite a very challenging environment created by COVID-19,” explained Kevan Krysler, CFO at Pure Storage. “We were pleased that our customers continue to depend on the simplicity and reliability of our solutions and our resilient global supply chain during this critical time. Subscription Services continue to reflect strength with our Evergreen, Pure as-a-Service and Cloud Block Store offerings.”

Due to the pandemic, Pure Storage withdrew its fiscal 2021 annual guidance and will not provide specific fiscal Q2 guidance. However, the company’s current view of fiscal Q2 outcomes — which should not be viewed as guidance — is that sales will be near flat year-over-year and operating profit will be near break-even.

ServiceNow Partnership

Late last month, Pure Storage (NYSE: PSTG) had announced that ServiceNow starting using their services as the backbone for the ServiceNow platform, which is an enterprise cloud infrastructure that powers customized digital workflow solutions designed to make productivity easier for people.

Specifically, ServiceNow is replacing its legacy storage infrastructure with Pure. This will empower ServiceNow’s customers to deploy new features sooner with 4x faster access to test environments. And the cloud infrastructure team saves tens of thousands of admin hours every year despite managing a storage environment that is 10 times larger. In turn, the team will be able to take a more strategic role in the business, ServiceNow will now be able to capitalize on emerging technologies including Splunk, Elastic’s ELK stack, AI, and machine learning.

Pure Storage Stock Performance – (NYSE: PSTG) as of 06/01/2020 afternoon

1 month: Up about 17.78%

3 month: Up about 11.14%

6 month: Up about 5.51%

YTD: Down about 0.94%

1 year: Down about 21.06%

2 year: Down about 24.88%

4 year: Up about 3.55%

Should You Buy Pure Storage Inc (NYSE: PSTG) Now?

Based on the reports I have been reading, 77% of analysts are saying buy, 23% of analysts are saying hold, and 0% are saying sell. In another report, I am seeing that 1 analyst is saying strong buy, 1 is saying buy, 2 are neutral, 0 says sell, and 0 say strong sell.

Disclosure: I own a small number of Pure Storage Inc (NYSE: PSTG) shares. I wrote this article myself and I do not have any business relationship with any company whose stock I write about. I am not a financial advisor and all articles are my opinion. You should do your own due diligence and consider talking to a financial professional before investing.