Pure Storage (NYSE:PSTG) received some positive commentary from Wall Street on Monday, as investment firm KeyBanc Capital Markets raised its price target on the flash data storage company, citing the company's ability to perform well in the hybrid cloud market.
Analyst Thomas Blakey, who rates Pure Storage (PSTG) overweight, raised his price target to $43 from $36, while also boosting earnings estimates. The analyst also noted the price target boost is due to increased service and support revenue, which are likely to become 50% of revenues by 2025.
"Storage as a service (STaaS) and services, such as ransomware, backup, analytics, spend management, data migration, K8s support, data unification, and more, should increase storage and data management vendors’ value [proposition] in the coming years, driving growth, in our view," Blakey wrote in a note to clients.
Pure Storage (PSTG) shares rose slightly more than 1% to $36.24 in premarket trading on Monday.
In addition, Blakey also raised estimates for product revenue, boosting his forecast to 10% growth, up from 3%, as continued "strong" storage trends for 2022 and 2023 and stable supply chains remain in place.
The analyst also said that Pure Storage (PSTG) is "well positioned" to capitalize on these hybrid cloud storage trends, as well as having more strategic relationships with customers to boost spending.
Earlier this month, Pure Storage (PSTG) delivered fourth-quarter earnings and revenue beats and issued guidance that surpassed Wall Street expectations.