Pure Storage slides on first "sell" in 2 years as UBS turns bearish

Everpure

02/07/2024 15:56

** Shares of Pure Storage  PSTG.N  drop 5.2% to $62.12,
about a 1-mth low, on Tues after UBS downgraded to "sell" from
"neutral", saying data storage firm's valuation not justified
given increased competition
    ** Stock on course for biggest one-day pct drop since Nov 30
    ** This is PSTG's first "sell"-rating in at least 2 years,
per LSEG data
    ** UBS estimates rev growth of ~8% over next 5 years vs 16%
growth the prior 5 years as PSTG's all-flash share should
plateau ~15%
    ** Its flash market share has declined 80 bps to 14.5% over
past 6 months as new offerings like NetApp's  NTAP.O  C-series
have increasingly resonated with enterprise customers, UBS says
    ** PSTG's valuation has benefited from view that AI
infrastructure investments will accelerate growth, UBS says, but
posits AI-related storage spending will likely be slower than
the market expects
    ** Still, UBS raises PT by $3 to $47
    ** Now, 15 of 21 brokerages rate PSTG "strong buy" or "buy",
and the other 5 have "hold"; median PT of $72.50 up from $52 on
Apr 2 - LSEG
    ** Even with session decline, PSTG's shares up 74% YTD

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))