Pure Storage Stock Sinks Despite Strong Quarter

The security is brushing off no fewer than five price-target hikes as well

Deputy Editor
Sep 1, 2022 at 10:33 AM
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Pure Storage Inc (NYSE:PSTG) stepped into the earnings confessional after the close yesterday, announcing second-quarter profits of 32 cents per share on revenue of $646.77 million, which is higher than the estimated 22 cents per share on $634.23 million. The data storage tech name also lifted its full-year forecast on strong demand. No fewer than five analysts lifted their price targets in response, with the highest from Northland Capital to $47 from $44. 

The shares of Pure Storage stock have reversed their premarket gains, however, down 3.5% at $27.96 at last glance. This drop has PSTG breaking below the supportive $29 level, though its 50-day moving average appears to be keeping a cap on losses. Now on track for its fifth-straight day in the red, the equity is down roughly 13% year-to-date. 

There is plenty of short-covering potential, as short interest makes up 7.2% of the stock's available float. It would take nearly six days to buy back these bearish bets, at the stock's average pace of trading. 

PSTG's typically quiet options pits are seeing four times the intraday average volume, with 1,469 calls and 906 puts exchanged so far. The September 30 call is the most active, and is also one of the top open interest positions. 

The options pits have been firmly bullish in the last five weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PSTG's 50-day call/put volume ratio of 5.53 sits in the 90th percentile of its annual range, showing calls being picked up at a much faster-than-usual rate. 

It's also worth noting that the security's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 98 out of 100, meaning PSTG has exceeded option traders' volatility expectations during the past year -- a good thing for options buyers. 

 

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