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Pure Storage
PSTG-N
BUY
Dec 06, 2023
N/A
Stock price when the opinion was issued
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EPS of 50c beat estimates of 40c, and sales of $763M were inline. However, forecasts were lowered, with 4Q sales guidance at $782M vs prior estimates of $924M. Operating margin forecast 19% vs 21.1%. The company has seen headwins on large orders and the results were quite disappointing as some peers reported much stronger results. One very large order ($41M) was pushed out to January. With the stock decline (worst in four years) the P/E is now 23X. It has $1.1B net cash. Even with reduced guidance, growth is still expected to be 15% next year. Cash flow remains high with strong free cash flow conversion ($454M in 12 months). While disappointing for sure, not a complete disaster. The stock might flat line for a while, but the underlying trends (data centres, AI) remain positive. Insiders still own $600M in stock. We would expect a slow recovery here over time.
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