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Pure Storage Stock Climbs on Second-Quarter Earnings Beat

Pure Storage hears good things from analysts after posting second-quarter earnings.

Pure Storage  (PSTG) - Get Pure Storage, Inc. Class A Report surged Thursday after the data-storage provider beat Wall Street's second-quarter earnings expectations and raised guidance.

Shares of the Mountain View, Calif., company were rising 14.5% to $23.99 on Thursday.

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Pure Storage reported non-GAAP profit in the quarter of 14 cents a share, ahead of the FactSet consensus of 5 cents. 

Revenue totaled $496.8 million, up 23% from a year ago, and beat Wall Street's calls for $471.6 million.

Subscription services revenue totaled $171.9 million, up 31% year over year.

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"With revenue growth exceeding 23%, and the highest Q2 operating profit in our history, it's clear that our long-term strategy to provide customers with modern data services is working," said Charles Giancarlo, chairman and CEO, in a statement.

Looking ahed, Pure Storage called for third-quarter revenue of $530 million and 2022 revenue of $2.04 billion.

Analysts expect third-quarter revenue of $526 million and full-year revenue of $2.03 billion.

Stifel analyst Matthew Sheerin increased his price target to $28 from $25 and reiterated his buy rating for Pure Storage, saying in a research note that "adjusted operating margin of 9.4% was well above our estimate."

"Management noted particular strength from enterprise customers amid signs that on-prem spending continues to improve, despite recent Covid outbreaks that have slowed the return to offices," Sheerin said.

Cowen analyst Karl Ackerman, who has an outperform rating and $30 price target, said "a stronger storage and compute spending backdrop is evident, though we do think the upwardly revised full-year outlook is very doable."

"Quite simply, PSTG remains unencumbered by legacy disk and hybrid arrays facing secular headwinds," the analyst said, "and the company’s best-in-class unified storage software enables customers to build and innovate applications using a hybrid, multi-cloud approach."