JMP Reiterates Positive Rating On Pure Storage As Shares Up 12% On 'Strong' Earnings

JMP Securities maintained its Market Outperform rating and $19 price target on Pure Storage Inc PSTG, saying that the upcoming product cycle presents buying opportunity. further.

Pure Storage reported second quarter EPS of $(0.16) on revenues of $163 million and guided to third quarter implied EPS of $(0.15) at the midpoint on revenues of $187-$195 million.

The highlight of the quarterly results is the surge in the product revenue growth to 84 percent year-over-year from 76 percent in the prior quarter.

"We believe the strong results suggest market trends in all-flash remain favorable and that Pure is executing particularly well against the competition," analyst John Lucia wrote in a note.

Pure Storage said it added 28 Fortune 500 accounts in the quarter, up from six adds in the prior quarter, bringing its total to 100. Operating margins expanded to -19 percent in the second quarter versus from -61 percent in the same quarter last year.

"In addition to strong fundamentals, we believe Pure's new FlashBlade product represents a major product cycle that will drive significant revenue growth, presenting a buying opportunity for investors," Lucia noted.

Shares of Pure Storage closed Thursday at $11.83. In the pre-market hours on Friday, they gained 13.69 percent to $13.45.