There's been a notable change in appetite for Pure Storage, Inc. (NYSE:PSTG) shares in the week since its second-quarter report, with the stock down 18% to US$50.32. It looks like a credible result overall - although revenues of US$764m were what the analysts expected, Pure Storage surprised by delivering a (statutory) profit of US$0.10 per share, an impressive 87% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the current consensus from Pure Storage's 19 analysts is for revenues of US$3.13b in 2025. This would reflect a credible 4.0% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to nosedive 28% to US$0.30 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$3.13b and earnings per share (EPS) of US$0.28 in 2025. So the consensus seems to have become somewhat more optimistic on Pure Storage's earnings potential following these results.

The consensus price target fell 6.6% to US$65.80, suggesting the increase in earnings forecasts was not enough to offset other the analysts concerns. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Pure Storage at US$80.00 per share, while the most bearish prices it at US$45.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Pure Storage's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.3% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.7% annually. So it's pretty clear that, while Pure Storage's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Pure Storage's earnings potential next year. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Pure Storage's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Pure Storage going out to 2027, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Pure Storage you should know about.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.