By Mackenzie Tatananni
Shares of Pure Storage rallied by double digits in after-hours trading Wednesday and extended the sharp gains Thurday after the maker of flash memory products posted better-than-expected earnings and boosted its fiscal-year guidance on the back of a strong quarter.
The market reaction was "justified," according to Guggenheim analysts, who dubbed the last three months "a pivotal quarter for PSTG." The Guggenheim team maintained a Buy rating and $93 price target on the shares in a note Thursday.
Key to the firm's bullish stance was Pure Storage's deep ties with Meta Platforms. The company's multi-year relationship with Meta has taken many forms.
In 2022, Pure Storage announced that it would be lending its flash storage systems to Meta's AI Research SuperCluster, a supercomputer powered by artificial intelligence. Meta noted in a blog post this March that it had "started working closely" with Pure Storage and other partners to bring quad-level cell storage to its products.
On the latest earnings call, Chief Financial Officer Tarek Robbiati said Pure Storage was confident it could ship one or two exabytes of DirectFlash to Meta by the end of fiscal 2026, with the potential for additional shipments this year.
In regard to the latest deal, Guggenheim believes it could lead to sustainable 20% growth for Pure Storage starting in fiscal 2027, with a free cash margin of 25% or above starting in 2030.
"Additionally, management said the progress with Meta has accelerated engagements ... with other hyperscalers, positive for the future even if timing of a second deal is uncertain," the analysts wrote. "To top it all off, the core business appears materially better than the investment community expected."
The firm cited commentary from Pure Storage CEO Charlie Giancarlo, who noted that macroeconomic headwinds had abated while demand signals, such as an expanding pipeline of deals and expansion within existing partnerships, remained strong.
Susquehanna analysts echoed the sentiment, saying the latest results were "better than feared," with upside to revenue and gross margin driven by a favorable product mix. The firm rates Pure Storage at Positive, or a Buy equivalent, with a $75 target price.
Susquehanna anticipates that shipments to other hyperscalers besides Meta could begin in earnest as soon as mid-calendar 2026. The company's upcoming analyst day on Sept. 25 is a "key catalyst -- not only for refining our modeling assumptions but also for gaining visibility into critical milestones," the firm wrote.
Evercore ISI analysts cited an "impressive beat and raise" in the latest quarter. Management's guide for the second half of the year "is reflective of a better macro environment coupled with better demand from several key PSTG products," analysts wrote.
While the relationship with Meta is continuing to ramp, "PSTG noted they are starting to see some revenue contribution in Q2 already," the firm noted. Evercore analysts maintained an Outperform rating on the shares while boosting their price target to $80 from $70. In their view, Pure Storage is positioned to sustain mid-teens sales and high-teens earnings growth.
The stock spiked 24% to $75.19 and was heading for its highest close since Feb. 10, when it ended the session at $70.29.
Pure Storage has no shortage of fans on Wall Street. Of 21 analysts polled by FactSet, 15 rate the stock at Buy, five at Hold, and one at Sell.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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August 28, 2025 10:05 ET (14:05 GMT)
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