Categories Analysis, Technology

Pure Storage (PSTG) has what it takes to deal with market volatility

Pure Storage (NYSE: PSTG), which set a new trend in data storage by pioneering the concept of all-flash enterprise array, added around 500 new customers in the most recent fiscal quarter. Though the company ended 2019 on a positive note, it issued weaker-than-expected guidance for the current fiscal year.

trending stocks high volatility

The management also reiterated its commitment to providing customers with ‘modern data experience,’ leveraging the revamped portfolio. As part of the multi-cloud strategy, the company has forged partnerships with industry leaders like Microsoft (MSFT) Azure and Google (GOOG) Cloud, for providing hybrid cloud ecosystem.

Mixed Cues

While the tie-ups bode well for the company in terms of expanding market share, the recent layoffs have been a cause for concern. Earlier, the management maintained that the covid-19 crisis would not have any significant impact on the business and claimed it was expecting an uptick in bookings in the Asian market. Nevertheless, the downsizing is viewed as a response to the general slowdown, spurred by the epidemic and troubled macro environment in China.

Related: IBM’s stock rallies after strong quarterly results

It is true that the recent lows have made the stock an attractive investment target, but there is apprehension about the prospects of a healthy recovery. Analysts have been divided in their recommendations, though most of them see an uptick later this year. 

Short-Lived Slump?

The current slowdown should be temporary as it has more to do with the industry-wide crisis than internal weakness. It’s a fact that 2019 was a challenging year for the industry as a whole, owing to pricing issues, faltering memory demand and global issued like the trade war. Moreover, Pure Storage’s overall performance has been better than its peers, reflecting its focus on innovation and new products, like the third-generation FlashArray launched recently.

Looking Back

In the fourth quarter of 2020, earnings rose to $0.23 per share, on an adjusted basis, and topped the estimates even as revenues moved up in double digits to $492 million amid solid bookings growth.

Also See: Pure Storage Q4 2020 Earnings Conference Call Transcript

After withdrawing from its peak about one-and-half years ago, Pure Storage stock witnessed several ups and downs since then and mostly under-performed the market. Battered by the coronavirus crisis, the stock closed the last trading session at the lowest level in three years. It is down 42% from last year’s levels.

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