{ "docId": "019dd923-622c-750b-8b98-491cf8c853e8", "docSlug": "3b36a8e60d92", "documentTitle": "Pure Storage, Inc. (PSTG)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-09-01 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 7, "pageCount": 35, "prevPage": 6, "nextPage": 8, "slideType": "valuation_table", "function": "show_valuation_bridge", "density": "dense", "nDataPoints": 12, "notes": "The slide uses a short-thesis framework, contrasting Pure's performance with NetApp's.", "elementsJson": [ "paragraph", "valuation_table", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-491cf8c853e8/7", "deckHref": "/decks/019dd923-622c-750b-8b98-491cf8c853e8", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-491cf8c853e8.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-491cf8c853e8#slide-7", "components": [ { "bbox": null, "kind": "callout", "text": "Averaging these two methodologies yields a $35 per share price target representing 55% downside.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-fb90-708a-8690-dc9ae0ce5dc3", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "price target: $35.19", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-fb90-708a-8690-e21215eca356", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.76, "x": 0.12, "y": 0.09 }, "kind": "paragraph", "text": "We foresee a reversion to Pure's historical 3.0x revenue multiple, representing 50% downside from current. With well over $3 billion in LTM revenue, we believe Pure should trade at peer company profit multiples based on its current margin structure as opposed to some theoretical scenario where it magically achieves NetApp's vastly superior margin profile. Analysts need to come to terms with the fact that Pure simply may not have the operating leverage they wish it had. Thus, valuing Pure's consensus CY2026 EBITDA at NetApp's 10x multiple yields 60% downside. Averaging these two methodologies yields a $35 per share price target representing 55% downside.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "205227b5-9840-4ec9-81e0-bc9c706fd086", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.45, "w": 0.76, "x": 0.12, "y": 0.38 }, "kind": "paragraph", "text": "Our short call is even more timely after Pure's recent FQ2 earnings report, which sent its shares up over 30%. For much of the past three years, consensus revenue estimates have aligned with Pure's guidance, and the company has usually posted modest 1-2% beats, not much different from this quarter's 2% outperformance. Pure management also modestly increased its FY2026 revenue guidance by 3%, which sounded more like management correcting for excess conservatism due to macro concerns when their initial guidance was released in May than any newfound growth. And despite the revenue beat and raise, neither the recent quarter nor revised guidance showed any signs of long-awaited operating leverage. In fact, very little of what Pure disclosed contained any confirmatory data points surrounding the major elements of the bull thesis. Some of the strength came from Pure's niche Portworx offering, and management largely evaded an analyst question regarding Series//E traction. Commentary regarding Meta merely met previous guidance, and management was noticeably conservative and noncommittal as it regards new hyperscaler wins. While Pure may not be saddled with public sector exposure like its peers, it remains stagnant in the AFA market, where NetApp reported it gained the #1 position in Q1 based on IDC data. And speaking of NetApp, investors who believe Pure is alone in disrupting enterprise storage should listen to the NetApp earnings call, as the CEO reviews of customer wins were virtually identical with the exception of NetApp deriving more substantial benefits and traction from AI-centric applications. Overall, nothing we heard changed our view of Pure's increasingly challenged competitive position.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4f67c151-d36c-433a-9698-24401a4300ed", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.01, "w": 0.25, "x": 0.12, "y": 0.345 }, "kind": "source-note", "text": "Source: S&P Capital IQ, Kerrisdale analysis", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "aca091c6-a4ee-4532-b4a2-2ebd76c95190", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.76, "x": 0.12, "y": 0.255 }, "kind": "table", "text": "Methodology, Consensus, Multiple, Price, Downside. Comparable Company CY2026 Revenue Multiple, 4147, 3.0x, 39.02, (50%). Comparable Company CY2026 EBITDA Multiple, 974, 10.0x, 31.35, (60%). Average, 35.19, (55%)", "attrs": null, "subkind": "valuation", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a9ffcfcf-da72-49ad-84db-683df44e89d4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.3, "x": 0.35, "y": 0.255 }, "kind": "title", "text": "Kerrisdale PSTG Price Target Derivation", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8d953b31-a525-4093-82bf-c267ea05b2e9", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 9, "from": 5, "beatId": "cff50efd-10a5-41cb-983b-0a7b44deb9da", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Villain Critique", "beatSlug": null, "evidence": "The document critiques Pure Storage's growth prospects and valuation", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 32, "from": 5, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "f175e9df-40bd-4f68-b964-eed15e12ff5a", "evidence": "The document highlights the risks of investing in Pure Storage", "position": 0, "objective": "To highlight the risks of investing in Pure Storage", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }