Scalper1 News
Tectonic shifts to cloud computing and flash storage make the time ripe to build a new storage franchise, with Pure Storage ( PSTG ) seen as an industry disruptor. Pacific Crest Securities analyst Brent Bracelin, in a new research note, says that Pure Storage has been able to sustain solid growth and market share gains despite legacy vendors such as EMC ( EMC ) and NetApp ( NTAP ) putting Pure Storage in their cross hairs. Bracelin’s report came as Pure Storage introduced several new products on Monday that expand its portfolio of storage systems, including products that integrate more tightly with server gear from Cisco Systems ( CSCO ). Pure Storage provides the $24 billion enterprise storage market with technology using flash chips, similar to the chips that smartphones use. Flash-based storage arrays are much faster than disk-drive storage systems but come at a higher price, depending on how the technology is deployed. Flash is seen as the future of storage, with the transition well underway but still in the early stages. “We believe these new products, coupled with continued declines in flash pricing to less than $1 per GB, should give Pure Storage the ammunition to sustain share-gain momentum into 2016,” Bracelin wrote. EMC and NetApp lead in the disk-storage systems market and also have expanded into flash-chip storage systems. NetApp and EMC, which Dell is acquiring, are much larger than Pure Storage, but the smaller company is growing much faster. It has yet to turn a profit, however. Storage Ready For Revolutionary Changes Pure Storage revenue has zoomed from $6 million in 2013 to $440 million for its fiscal 2016 ended Jan. 31. But the company has posted big losses as it spends heavily on research and development and on marketing to grow market share. Pure Storage kept its string of triple-digit revenue growth alive on March 2, when it posted fourth-quarter earnings that beat Wall Street estimates, as did its Q1 outlook. Company CEO Scott Dietzen says that the data storage industry is on the cusp of a revolutionary change that Pure aims to lead. But a recent report from Summit Research said that while Pure Storage has cutting-edge data technology, it will face an uphill battle trying to dislodge EMC and NetApp. Bracelin has an overweight rating on Pure Storage stock and a price target of 24. Pure Storage stock was near 12.50, in midday trading on the stock market today — down 3% despite the bullish research note. Pure raised $425 million with its initial public offering on Oct. 7, pricing shares at 17. The stock peaked at 20.60 on Oct. 15 and hit a low of 11.05 on Feb 8. “While execution risks remain elevated as legacy vendors attempt to grab share by discounting storage pricing, a solid track record of execution since the October 2015 IPO increases our confidence that Pure Storage can sustain solid momentum and share gains,” Bracelin wrote. Image provided by Shutterstock . Scalper1 News
Scalper1 News