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Pure Storage: Business transformation benefits

Pure Storage: Business transformation benefits

Pure Storage shares have risen 25% over the past 12 months. The active growth of securities began in the last three months of 2021, when investors decided to pay attention to value stocks. However, there are also reasons for optimism that are specific to Pure Storage, and not for the entire market.

If earlier the company's business consisted in the production and sale of data storage equipment, recently services have played a significant role. In the third quarter of 2021, the number of subscribers increased by 37% YoY (31% a quarter earlier). On Wall Street, such sources of recurring revenue are highly valued, but investors still treat Pure Storage as a hardcore company with low profitability. The value of the company (enterprise value) is $9.2 billion, next year revenue is expected to reach $2.4 billion (+18% YoY), which means the forward EV/S ratio does not exceed 4, which is incredibly small for the technology sector.

As additional "bullish" factors, it is worth mentioning the growth in the share of revenue that accounts for corporate clients - about 50%, while the 10 largest clients spend more than $100 million annually. FCF values are already quite decent - $271.9 million since the beginning of the year, which is 130% more than the same period of the previous year. Further improvement of the operating margin figure leaves a good potential for increasing the amount of incoming cash.

At the end of the third quarter, revenue increased by 11% YoY to $3.19 billion, which is higher than both the consensus forecast (+9% YoY) and the results of the previous reporting period (+9 YoY).


 

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The main trends of pharmaceutical corporations in 2022
JPMorgan Chase, stock, Pfizer, stock, Moderna, stock, The main trends of pharmaceutical corporations in 2022 The JPMorgan Chase & Co (JPM) annual healthcare conference ended in San Francisco on January 13. This event with a forty-year history is considered one of the most significant in the medical community: pharmaceutical company executives participate in it, important statements about mergers and acquisitions are made on its site, new drugs are presented and breakthrough research is announced.Taking into account the new realities, for the second year in a row, the event is held in an online format. Let's list the most interesting industry trends that were outlined in the speakers' speeches.The use of RNA is recognized as the main trend in pharmacologyRibonucleic acid (RNA) is one of the three main macromolecules in the cells of all living organisms. Although the functions of RNA are not yet fully understood, studies show that this acid plays an important role in the coding and regulation of genes.Ribonucleic acid has attracted increased attention in connection with the development of vaccines against Covid-19. The previous generation of vaccines involved the introduction of a weakened virus into the body to form a subsequent immune response. Moderna (MRNA) and Pfizer (PFE) vaccines, created on the basis of informational RNA, work differently: they ”teach" human cells to produce a protein that triggers an immune response to prevent infection with coronavirus. Thus, the immune system of a vaccinated person is trained to recognize a protein containing Covid-19 and produce antibodies to it.As part of the conference, Pfizer announced the conclusion of three agreements with smaller industry players to accelerate RNA developments. The company sees a huge potential for RNA-based drugs - in particular, in the treatment of cancer and rare diseases. Amgen's interest in collaborating with Arrakis Therapeutics in the study of RNA is widely discussed, which could result in an order for several billion dollars for the latter. Pharmaceutical giants Johnson & Johnson (JNJ) and Eli Lilly (LLY) have so far limited themselves to restrained statements that they are exploring the possibilities of RNA technologies.Coronavirus pushes for partnerships instead of mergersFor the second year in a row, the healthcare sector has not heard about major deals. The coronavirus has shuffled all the cards. Previously, when a breakthrough technology was discovered, a pioneer was usually expected to be absorbed at a premium to the market, but the pandemic has taught companies to think in a new way, and now they are increasingly inclined to partnerships.The most telling example was the collaboration in the development of a coronavirus vaccine between Pfizer and BioNTech (BNTX). Through partnership, large players actually place an order for development to specialized companies with lower turnover. As a result, both sides benefit: pharmaceutical giants save money, and their partners receive orders and financing.Covid-19 ComebackHaving not had time to fully vaccinate against Covid-19, humanity faced a threat in the form of a new and more contagious variant of the coronavirus - "omicron". A strain from South Africa sets anti-records for morbidity in developed countries, involving pharmaceutical giants in a new development race.Some companies at the conference reported on the supply of their drugs against coronavirus. So, Moderna reported that its sales in 2021 amounted to $ 18.5 billion. GlaxoSmithKline (GSK), in partnership with Vir Biotechnology (VIR), reported on the supply to the US government of 600 thousand doses of the drug for the treatment of Covid-19 sotrivimab. Novavax (NVAX) announced that it has already made the first shipments to Europe of its Covid-19 vaccine, but did not specify the volume of orders. And Gilead Sciences (GILD) has informed that its drug remdesivir may soon be approved by the US regulator for the treatment of coronavirus.As for the development of drugs aimed directly against the omicron strain, only Regeneron (REGN) and Pfizer have made statements about this. Regeneron is going to test the treatment of omicron with antibodies in the first quarter, and Pfizer spoke about the progress in creating a new vaccine against Covid-19, which will also work against the new strain.There is an opinion that omicron as an opportunity rather than a threat. Perhaps omicron is our salvation from coronavirus restrictions, since the body of vaccinated people, having met with a new strain of virus from South Africa, gives an immune response, which can be considered as an alternative to booster vaccination. Which, in a global effect, can give massive protection against coronavirus infection.Patent diversificationLarge pharmaceutical companies are in a hurry to reassure investors who are beginning to pay attention to the patent terms of drugs that occupy a large share in their sales.As a rule, after the expiration of a patent for a particular drug, the market is flooded with its cheaper copies, which significantly reduces the revenue of the manufacturer of the original drug. Therefore, investors expect a diversified portfolio of developments from pharmaceutical giants, which will include not only expensive cancer drugs, but also a wide range of medicines for other diseases.For example, the patent of the anti-cancer drug from Merck & Co (MRK) Keytruda expires in 2028. Total sales of this drug for 2020 amounted to $14.4 billion, which accounted for 30% of Merck's revenue. If the company does not explain to investors before the expiration of the exclusivity period how it is going to compensate for the upcoming "loss” of sales volumes, the market reaction can be very negative.Analysts' opinionAn endless "arms race" continues in the pharmaceutical sector. Since breakthrough technologies and patents provide only a temporary competitive advantage, companies have to constantly set themselves new and new goals.However, the JPMorgan conference reflected some changes in the behavior of both pharmaceutical companies and their investors. Industry representatives confirmed their propensity to create partnerships, and investors confirmed their demands for diversification of development portfolios.The most obvious new trend among the elite of pharmacology has been the use of ribonucleic acid to encode the human immune system. It is assumed that with the proper development of technology, scientists will be able not only to achieve the necessary immune response to various infectious diseases, but also to eliminate defects in hormones or blood quality.And the main intrigue remains who will be the first to develop a vaccine against the omicron strain. Leading pharmaceutical giants are studying its characteristics, causes of origin and the reaction of previously vaccinated people to it. Thus, the beginning of this year is similar to the beginning of the previous one. Back then, we were also on the verge of creating a working version of the vaccine and watched the deadly virus walk around the planet uncontrollably.
Jan 19, 2022
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How does the weather interfere with business?
How does the weather interfere with business? In 2021, the weather actively prevented many companies from doing business:hurricanes and floods blocked transport routes;droughts, frosts and fires stopped the production of companies and their suppliers.At the same time, the longer the chain of suppliers, the higher the risks. The chances that at one stage the goods will “get stuck” due to bad weather increases greatly.Bloomberg points out that in the United States in 2021, the losses of companies from weather events amounted to $101 billion – the third largest figure in half a century. And these are only insured.And frequent cataclysms and the global "shift" of the weather interfere with the generation of energy from renewable sources. For example, at the beginning of winter, Europe faced windless, but cold weather.What is the result? Wind generation has risen, and the demand for gas and thermal coal has increased sharply. This has hit the transport industry: fuel is getting more expensive, transportation is canceled or becomes unprofitable.How to protect yourself from natural disasters?It's not easy. Companies now have to do several things at the same time:spending money on dealing with the consequences of disasters that have already happened;invest in protection against future;to increase the environmental friendliness of business to prevent drastic climate change.The COVID-19 pandemic also adds problems, because many borders are locked. But it will end sooner or later, but natural disasters will continue to negatively affect supplies further.As noted in the business school at the Massachusetts Institute of Technology, managers are poorly prepared for such difficulties. Sometimes they “don't even know where their suppliers are located and how their supply chain works.”Weather chaos is comingThe most noticeable effect of global warming is in the increasing natural disasters. Special project "Climate Chaos", climate zones are gradually shifting, and this leads to the following:weather changes are becoming more dramatic;cataclysms occur less predictably;the frequency and strength of abnormal natural phenomena are increasing.The most recent examples:Hurricane Ida, which caused trouble to oil workers;abnormal frosts in Texas;typhoon in China, which closed international ports.How to deal with the problemAt a minimum, it is necessary to carefully manage logistics and the dependence of the product on stable supplies.For example, in the automotive industry, its own "local" production of components is becoming increasingly popular. Companies are modifying electronics manufacturing to be less dependent on specific types of semiconductors and their supplies.Nevertheless, despite the struggle to reduce emissions, serious climate change should be expected closer to 2030. Moreover, at the UN Climate Change Conference in 2021, representatives of the countries did not agree on any concrete actions.
Jan 17, 2022
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TCS Group bought a crypto exchange
TCS Group bought a crypto exchange TCS Group, the parent company of the Russian Tinkoff Bank, has become the main shareholder of the Swiss trading service Aximetria, focused on operations with crypto assets, The Bell reports.The deal took place back in November. According to preliminary data, TCS bought 83.2% of the shares of the crypto exchange for about 36 million rubles. The company has not yet disclosed the details of the transaction and plans to do so in its annual report.What is Aximetria?The Aximetria service was created in 2017 by Alexey Axelrod, a native of Russia, who in the past was the director of the Big Data division at AFK Sistema.The cryptoplatform provides services for private and corporate clients in Europe, Asia, South America and the CIS. She has a FINMA (Swiss Financial Market Surveillance Service) license to process cryptocurrency and fiat transactions. As reported on the Aximetria website, transactions and asset storage are carried out on the territory of Switzerland. The company's head office is located in the same place - in Zug.By the way, the company's website has been created in three language versions - English, German and Russian, so the company is clearly interested in attracting Russian-speaking customers.The platform already has a mobile application. So far, it is possible to make transactions with only three currencies through it - Bitcoin, Ethereum, Tether. The commission for buying and selling is 1.99%. There is no possibility to withdraw the purchased cryptocurrency to another wallet. At the same time, the application interface is very similar to the interface of the main applications of Tinkoff Bank.So far, Aximetria cannot be called a full-fledged exchange. According to its model, its service is very similar to the Revolut wallet, which also allows you to buy cryptocurrency, but only for storage and possible sale in the future, and not for payment for goods or services.Why does TCS Group need its cryptoservice?Back in the summer, the executive director of TCS Group, Oliver Hughes, said that Tinkoff Bank could not provide crypto services because of the position of the Russian regulator. Recall that the head of the Bank of Russia stated that the Central Bank of Russia "cannot welcome" investments in such assets and advocates that the Russian financial infrastructure should not be used for transactions with cryptocurrencies.Moreover, in Tinkoff Bank itself, there were cases of individual users being blocked, who often made deposits and withdrawals from cryptocurrency platforms. And in 2019, Oleg Tinkoff even wrote a post on Facebook, which declared the end of the cryptocurrency era and contained such words: "Unfortunately, there are millions of idiots in the world who believe that you can double your wealth by doing nothing, but simply buying a token and then selling it for twice as much."That is why the acquisition of a crypto service looks like a very unusual move for TCS. Most likely, the Tinkoff group still decided to enter this fast-growing market in order to provide cryptocurrency services to its customers through a Swiss company that is not bound by the restrictions of Russian legislation.However, the investment of $ 0.5 million is hardly a major investment, and Aximetria itself fades against the background of such mastodons of the market as Coinbase and Binance, which account for 54% of all visits to crypto exchange sites.
Jan 15, 2022
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Four tips for those who want to invest in crypto in 2022
Bitcoin/USD, cryptocurrency, Four tips for those who want to invest in crypto in 2022 Cryptocurrencies are definitely not an investment for everyone, but by choosing them, you can win financially. But first make sure that you have the means for unforeseen situations.Any money that is invested in cryptocurrencies should be perceived as already lost. This does not mean that these losses are guaranteed. But if such a possibility exists, then you need to make sure that there is a financial "safety cushion" in case of unplanned expenses. It should be enough for at least 3 months. If there is no free money available at the right time, then a situation may arise when it will be necessary to urgently sell your crypto assets in order to pay off debts.Also, when choosing digital assets, you need to explore your opportunities in this market. Although there is more pressure on specific crypto assets than on others, there are thousands of coins that can be added to your portfolio. So it is not necessary to agree to bitcoin at all. Perhaps a much less popular currency will be more suitable for investment.In addition, you need to understand your risks. There is no such thing as a risk-free investment. Even bonds, which are traditionally considered a "safe haven", can present unpleasant surprises in the form of financial losses. And cryptocurrencies are known to everyone as one of the riskiest investment tools.The reason? The crypto market is more volatile than other trading platforms. In addition, some markets are already more than 100 years old, and the "oldest" bitcoin cryptocurrency has only recently exchanged a dozen years. And it is not yet clear how long it will last. Recently, more and more countries have imposed restrictions on operations with crypto, and, as a result, this currency is becoming less attractive in the eyes of buyers. And the latter can significantly affect the value of such assets.And finally, you need to make sure that this type of investment fits into the chosen investment strategy. Someone buys a crypt in order to immediately resell it and exit the asset with a "quick" profit. And there are those who save up for retirement in this way. Therefore, first you need to understand what goals you want to pursue.
Jan 14, 2022
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Updating drivers - looking for landmarks
S&P 500, index, Updating drivers - looking for landmarks The past year ended very successfully for the American market: the S&P 500 rose by 26.9%, although initially a more modest increase was expected. So, our optimistic (!) scenario included an increase in the broad market index to only 10%. However, the US stock markets got off to a good start and remained on top with the support of the adoption of infrastructure reform. The economic recovery also turned out to be more active than we expected, and this helped companies to increase revenue and profit more intensively. At the same time, the development of all these trends contributed to the acceleration of inflation, which went far beyond the expectations of the Fed, the market and our forecasts. It was inflation that became the most discussed topic last year and will absolutely remain at the top of the agenda in the first half of 2022.To bring inflation under control, the Fed thought about reducing the balance sheet only at the beginning of this year: even in December 2021, there was no talk about it. The reduction of the balance sheet, combined with a sharper than originally planned increase in rates, can act as a reliable way to curb inflation expectations. These expectations are formed mainly on stock exchanges, which excludes their negative impact on the economy in general and on the labor market in particular. A steady positive trend in the labor market is indicated by data for October, when the number of open vacancies reached a record 11.03 million, 1.5 times exceeding the number of applicants. This ratio was last observed 50 years ago. Together with an increase in logistics efficiency, the restoration of production capacities and the gradual opening of the economy, this will lead to a gradual decrease in inflation. Of course, we have repeatedly talked about the upcoming opening of the economy after the pandemic during the second half of 2021, but this event is delayed due to the appearance of new COVID-19 strains. And yet, the longer the pandemic continues, the closer its end is.After a negative start to the year for most securities in the technology sector and a general correction, investors should consider closing hedging positions that I advised opening at the end of last year. Now is the time to buy a wide range of stocks with a focus on "value" and "quality" companies. The intensive growth of the economy serves as the basis for optimistic expectations regarding revenue and profit. That is why the upcoming reporting season is the strongest driver of the growth of quotations of representatives of the real sector of the economy. Of course, there is also a trend to reduce the cash flows of companies, since there is no effect of a low base and economic growth begins to slow down. However, it is predicted that the S&P 500 companies will increase sales by almost 15%, and their earnings per share will increase by 21.5%. Among the leaders will be the energy, raw materials and industrial sectors, as well as the segment of secondary necessities. The momentum for an upward movement in their quotes will be provided by strong results for the fourth quarter and optimistic forecasts for January-March. Separately, I would like to note the financial sector, which will not be able to demonstrate a record increase in revenue and profit, but industry forecasts for 2022 may become one of the most optimistic, taking into account the plans of the Federal Reserve to actively raise the key rate.
Jan 14, 2022
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Weekly review. January 10, 2022
EUR/USD, currency, US Dollar Index, index, Brent Crude Oil, energetic, Gold, mineral, Weekly review. January 10, 2022 The year 2022 on world markets will largely be determined by the tightening of monetary policy in the United States, and the first week of the new year confirmed this. The minutes of the Fed's December meeting published last week showed a significant tightening of the position of the regulator's representatives – Fed members believe that the rate can be raised as early as March, and also see a faster reduction in the balance sheet as appropriate. Representatives of the regulator believe that the current economic conditions are already in many ways conducive to tightening the labor market, some even noted the recovery of the labor market already sufficient for such actions, although the majority still expects further improvement in the labor situation. Against this background, it is worth noting the publication of December labor data in the United States, which came out ambiguous. On the one hand, employment in December increased by only 200 thousand. The Bloomberg consensus forecast assumed an employment growth of 450 thousand, and the actual growth rate of the indicator was the lowest since the beginning of 2021. Nevertheless, in many respects such weak employment growth is explained by seasonal adjustment, and the unemployment rate in December fell more than expected. Thus, the indicator has updated the next lows since the beginning of the pandemic, dropping to 3.90% against the expected 4.10%. The unemployment rate continues to approach a historic low of 3.40%, and labor statistics have further increased fears in the market of an imminent tightening of the PREP in the United States. As a result, on Friday, the yields of ten-year US treasuries at the moment exceeded 1.80% per annum - the maximum since the beginning of the pandemic. Today they have returned to these levels again.This week, the dynamics in the market will continue to be determined by expectations for the actions of regulators - investors will follow the statements of representatives of the Fed and the ECB, as well as the publication of price data in the United States for December. Statistics published last week showed an increase in inflation in the EU to 5.00% YoY. As a result, the topics of price growth in December updated the historical maximum, while analysts expected a slight slowdown in price growth. The situation on the supply side also has high inflation in the United States. The December business activity indices indicated a slight easing of logistical problems, however, the further deterioration of the epidemiological situation again intensified disruptions in logistics chains, which does not lead to a significant slowdown in price growth. The FAO World Food Price index fell in December for the first time since July, but food inflation remains at elevated levels. Against this background, US inflation data is likely to continue to bring the Fed rate hike closer, intensifying the negative in the markets.The main event for the oil market in early 2022 was the OPEC+ meeting. However, as expected, it was decided to stick to the current plan to increase production. Nevertheless, the cartel lowered its forecasts for a surplus in the oil market, which allowed Brent crude futures to exceed the level of $80/bbl. Moreover, against the background of interruptions in the supply of black gold from Kazakhstan and Libya, quotations were close to $83/bbl. However, at the end of the week they declined from these levels, today Brent futures are growing by 0.35% and are trading around $82.05/bbl. The main negative for oil this week may be related to the potential strengthening of the dollar amid expectations of a tightening of the PREP in the United States. However, in the absence of a significant strengthening of the dollar, Brent futures may still exceed the levels of $83/bbl– - the quotes may be supported by another weekly decline in oil reserves.
Jan 10, 2022
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The activity of cryptocurrencies: unsecured crypto loans and new
Bitcoin/USD, cryptocurrency, The activity of cryptocurrencies: unsecured crypto loans and new BTC metaverses continues to fall as part of a downward movement: quotes have broken through the lower limit of the flag formed in December, and are now aiming towards $37 thousand. However, this means that institutional investors have decided to take a break and sit on the sidelines until the storm in the market subsides. Already in the first days of January, there is a rapid activity of ventures. Below we will list the largest and most notable deals in the industry.Industry giant a16z has led a funding round for an additional $25 million for the Goldfinch project, which is trying to solve a serious problem of modern DeFi - to introduce unsecured loans. Now decentralized lending is not available to a huge number of people, as it requires excessive provision of cryptocurrency.Swiss bank Sygnum has raised $90 million to develop its services: spot trading, options, depository, fiat loans secured by cryptocurrency, and so on. According to the report, in 2021, the capital under the management of the organization exceeded $2 billion, and the number of institutional clients reached 2000.OpenSea's NFT marketplace has raised $300 million for further development. During the new round, the platform's valuation reached $13.3 billion. While the NFT segment data aggregator CryptoSlam received $9 million from Animoca Brands, OKEx Blockdream, Mark Kuban and others. Animoca Brands is developing areas of digital property rights and gaming that cannot be imagined without NFT technology, and plans to use CryptoSlam solutions to create an open metaverse.
Jan 10, 2022
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Lebanon will need 6-7 years to get out of the economic and finance crisis
Lebanon will need 6-7 years to get out of the economic and finance crisis Lebanon will be able to overcome the deep crisis in the sphere of economy and finance in 6-7 years, effectively reforming the country's economy. This was stated by Lebanese President Michel Aoun. The implementation of reforms agreed with the International Monetary Fund will contribute to positive changes in the economy. The Lebanese government, which estimates the country's financial losses at $69 billion, hopes that in the first two months of next year it will be possible to sign a loan agreement with the IMF. In order to improve the Lebanese economy, the authorities need to receive assistance in the amount of 10 - 12 billion dollars. The IMF can provide it on condition of reforming the banking sector and the country's tax system. The government will have to carry out a lot of work on restructuring the state debt, as well as stop paying subsidies that were made under several articles. In addition, the parliament should adopt a law ensuring control over the movement of capital, and the state apparatus in the country should be reduced. The Central Bank of Lebanon will have to undergo an audit. The IMF also proposes the introduction of a single exchange rate of the national currency in the country.
Jan 07, 2022
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