B of A Securities analyst Wamsi Mohan revised full-year estimates for Pure Storage, Inc. (NYSE:PSTG) forward of its earnings release on May 28.
The analyst forecasts first quarter fiscal 2026 income and EPS at $772 million and 26 cents, respectively, barely forward of Avenue expectations of $770 million and 25 cents.
The analyst highlighted that the primary quarter is often the corporate’s weakest from a seasonal perspective. Traditionally, since 2016, the primary quarter has proven a median sequential income decline of 16%.
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Mohan sees a extra average 12% quarter/quarter (Q/Q) decline, barely above typical seasonality, reflecting continued momentum from FlashBlade/E adoption.
Regardless of the continued adoption of FlashBlade/E, which is predicted to negatively impression product margins within the first fiscal quarter, the analyst forecasts an working margin of 10.7%.
That is larger than each the Avenue’s estimate of 10.6% and the corporate’s steerage of 10.4%. The analyst famous that the first driver for this stronger-than-expected working margin is strong subscription margins.
Additionally, the analyst estimates the second quarter income to be $835 million, barely under the Avenue estimate of $839 million.
The analyst expects the latest weak point in NAND pricing to help margin growth within the second and third quarters. PSTG sometimes prebuys uncooked NAND throughout weak point in NAND pricing, and the analyst expects some offset to margins from this.
The analyst anticipates PSTG to reiterate its full-year working margin steerage of 17%.
Mohan expects an enterprise IT spending pause within the second and third quarters of 2025 resulting from macro uncertainty, broadly impacting IT {hardware} however particularly storage (resulting from deferrable purchases). Elevated competitors from Dell Applied sciences Inc.’s (NYSE:DELL) new merchandise and aggressive pricing can also be anticipated to restrict the upside within the storage trade.
Other than this, Mohan revised EPS for FY27 to $2.07 (from $2.06) and FY28 to $2.46 (from $2.49 earlier).
The analyst states the upside dangers to the worth forecast embody a sooner business phase restoration, decrease flash prices, faster provide chain restoration, and sudden market share positive aspects.
The draw back dangers are an prolonged financial slowdown, rising prices, intense competitors from established distributors (NetApp, Inc. (NASDAQ: NTAP), Dell-EMC, Hewlett Packard Enterprise (NYSE:HPE)) and personal corporations, enterprise migration to the general public cloud, execution challenges from excessive development, and potential erosion of its software program aggressive benefit.
