Pure Storage Upgrade by Piper Sandler

Investing.com — Piper Sandler has upgraded Pure Storage (NYSE:PSTG) from Neutral to Overweight following a significant design win with a top-4 cloud hyperscaler.

Analysts have described this deal as a game-changer, stating it presents a "pure opportunity" that could lead to over $500 million in revenue by 2026, positioning the company for further growth in cloud and AI markets.

According to Piper Sandler, this victory removes previous risks and introduces catalysts for future growth. The firm believes it signifies Pure Storage's increased differentiation in the market, especially its appeal to cloud providers focusing on AI use cases.

Flash storage is gaining traction, particularly in cloud and AI sectors. Piper highlights that Pure's products are establishing a competitive advantage.

The analysts noted, "The narrative shifts to Cloud & AI over STaaS," indicating that Pure Storage's pivot from its Storage-as-a-Service (STaaS) approach has eliminated a previously challenging revenue headwind.

Pure's FQ3 results surpassed expectations in traditional sales but experienced challenges in lead metrics. Despite these hurdles, Piper Sandler maintains that the hyperscaler deal and broader market trends create a strong case for growth.

The firm sees potential for further estimate increases and multiple expansion, raising their price target to $76, suggesting a valuation of 25x estimated 2026 EBITDA. Their bullish valuation for the stock reaches $104 per share.

Piper Sandler concluded that Pure Storage's strong market position, alongside its achievements in the cloud and AI sectors, set it up for sustained growth.

"More hyperscalers could be coming," they indicated, emphasizing the opportunities ahead.