Pure Storage's Spending, Subscription Shift Clouds Outlook, Morgan Stanley Says

MT Newswires Live12-04 00:09

Pure Storage's (PSTG) aggressive spending and potential shift to subscriptions may limit how much of its growth turns into profit by fiscal 2027, Morgan Stanley said Wednesday in a report.

A "lack of conviction around a number of moving pieces in the model keeps us on the sidelines," Morgan Stanley said, even after the data storage provider posted higher fiscal Q3 results and boosted the full-year revenue forecast.

Morgan Stanley lowered its price target on Pure Storage stock to $83 from $90 and maintained its equal weight rating.

Pure Storage shares tumbled 26% in recent Wednesday trading.

Pure Storage has more pricing power than peers thanks to differentiated products and higher gross margins, which may help offset memory price inflation, Morgan Stanley said.

While hyperscale shipments are a positive, the profitability of those deals and margin prospects remain uncertain in the medium term, the report said.

Price: 69.98, Change: -24.75, Percent Change: -26.12

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