- On a day that flash storage array vendor Pure Storage opened under its $17 IPO price and closed 5.8% below it, beaten-down smaller rival Violin Memory (NYSE:VMEM) delivered big gains. Volume was light - 796K shares vs. a 3-month daily average of 1.35M.
- Violin's low valuation relative to Pure may have sparked some interest: Violin sports a $171M market cap and trades for 1.8x an FY17 (ends Jan. '17) revenue consensus of $96.7M, while Pure sports a $2.9B market cap and (given recent growth rates) perhaps goes for 4-5x forward sales.
- At the same time, the companies' growth profiles are very different: Pure's revenue rose 167% Y/Y in the 6 months ending July 31, while Violin, which already had a rough FY15, is expected to see revenue drop another 18.9% in FY16 before rising 51% in FY17.
- Last month: Violin rallies following fresh insider buys