By Callum Keown
When a stock jumps 20% after a company's earnings, it's typically down to the numbers. That might not be the case with Pure Storage on Wednesday.
Something else stole the show--the data storage company announced a "transformational design win" for its technology in a top-4 hyperscaler. It didn't name the company, but hyperscalers are large cloud service providers and the biggest 4 are Microsoft, Amazon, Meta Platforms and Alphabet's Google. Pure's DirectFlash technology would be used in "massive scale environments" currently dominated by hard disks, the company said, in an industry-first.
The shares were up 21% to $64.84 ahead of the open Wednesday.
Its fiscal third-quarter earnings were still a success--the company beat expectations and increased full-year revenue guidance. But it was the cloud announcement that had Wall Street, and investors, purring.
"The hyperscaler design win marks an industry sea change, rooted in Pure Storage's architectural differentiation, that should lead to more, similar deals while significantly increasing its competitiveness within its core enterprise customers," Guggenheim analyst Howard Ma said. He has a $93 price target on the stock, which he calls his 'best idea'.
"While numbers were good, the call and the trajectory of this stock will be heavily driven by their ability to scale their new 'Top 4' cloud win into sizable revenue," Evercore ISI analyst Amit Daryanani said. He has an Outperform rating on the stock and a $75 price target.
Stifel analyst Matthew Sheerin noted that the design win would see Pure provide its flash-memory storage and software offerings, replacing traditional hard-disk storage.
However he wasn't bullish. He has a Hold rating on the stock with a price target of $65. "Pure did not disclose the size of the deal, though it is expected to be a 'meaningful contributor' in FY27", he added.
Write to Callum Keown at callum.keown@dowjones.com
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(END) Dow Jones Newswires
December 04, 2024 07:53 ET (12:53 GMT)
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