Enterprise data storage company Pure Storage beat Wall Street's targets for its fiscal first quarter and guided higher than views for the current period. Pure Storage stock rocketed Thursday on the news.
The Mountain View, Calif.-based company late Wednesday said it earned an adjusted 8 cents a share on sales of $589.3 million for the quarter ended May 7. Analysts polled by FactSet had expected earnings of 4 cents a share on sales of $560 million. However, on a year-over-year basis, Pure Storage earnings slid 68% while sales declined 5%.
The report ended the company's streak of seven quarters of earnings growth and nine quarters of sales growth.
On a positive note, the company's subscription annual recurring revenue rose 29% year over year to $1.2 billion in the first quarter.
For the current quarter, Pure Storage forecast revenue of $680 million, up 5% from the same period last year. Wall Street had called for sales of $658 million in the fiscal second quarter.
Pure Storage Stock Breaks Out
On the stock market today, Pure Storage stock surged 19.1% to close at 34.28. With the move, Pure Storage stock broke out of a 29-week consolidation pattern at a buy point of 32.55, according to IBD MarketSmith charts.
"We are the clear leader in data storage, now delivering a portfolio that can address the vast majority of storage needs for all enterprises," Chief Executive Charles Giancarlo said in a news release.
He added, "The superior economics, performance, and operational and environmental efficiencies of Pure's product portfolio over both hard disk and SSD (solid-state drive)-based, all-flash competitive offerings are now undeniable."
PSTG Stock Gets Price-Target Hikes
At least nine Wall Street analysts raised their price targets on Pure Storage stock after the beat-and-raise report.
TD Cowen analyst Krish Sankar increased his price target on Pure Storage stock to 38 from 31. He rates PSTG stock as outperform.
"While some investors would have hoped for an increase in the annual guidance following the beat on the quarter and the guide, we note that Pure remains conservative in its estimates," Sankar said in a note to clients. Pure Storage faces some headwinds from the slower demand environment and elongated sales cycles, he said.
HPE, NetApp Also Moving On Quarterly Results
Other enterprise tech hardware stocks moving on earnings news included Hewlett Packard Enterprise and NetApp.
HPE stock fell 7.1% to 14.42 on Wednesday after the company delivered mixed fiscal second-quarter results and outlook late Tuesday. Earnings rose 18% year over year to 52 cents a share in the quarter ended April 30, topping views for 49 cents. But sales advanced just 4% to $6.97 billion, missing the target of $7.3 billion.
Weakness in sales of HPE servers and storage gear offset strength in equipment for artificial intelligence and high performance computing.
On Thursday, HPE stock rose 1.7% to close at 14.67.
NetApp shares jumped 8.5% to 71.96 on Thursday after the storage gear maker beat expectations for its fiscal fourth quarter late Wednesday. It also guided higher for the full year ahead, though its fiscal first-quarter outlook was light.
NetApp earned an adjusted $1.54 a share, up 8% year over year, on sales of $1.58 billion, down 6%.
Pure Storage Stock Ranks First In Industry Group
Pure Storage stock ranks No. 1 out of 10 stocks in IBD's Computer-Data Storage industry group, according to IBD Stock Checkup. PSTG stock has an IBD Composite Rating of 96 out of 99.
NetApp stock ranks third in the group with a Composite Rating of 74.
Hewlett Packard Enterprise is No. 12 out of 58 stocks in IBD's Computer-Tech Services industry group. HPE stock has a Composite Rating of 71, according to IBD Stock Checkup.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
